The free-trade movement and its results

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The Free-trade Movement

^

The

Free-trade Movement

And its Results

By

G. ARMITAGE-SMITH, M.A,

Principal of the Birkbeck Institution, and

Lecturer on Economics for the London Society for the

Extension of University Teaching

" Were all nations to follow the liberal system of free
exportation and free importation, the different states
into which a great continent was divided would so far
resemble the different provinces of a great empire."

—ADAM SMITH.

UNIVERSITY j

LONDON

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Preface.

In a Series dealing with the characteristic features of
the Victorian Era it is obvious that the Free-trade Move-
ment demands a place, although the literature of the
subject is so extensive that it might be thought the last
word had been already said. The old controversies,
however, still remain, and have in fact been renewed
with fresh vigour, partly owing to the persistence of the
United States and other countries in a Protective policy,
and also to the movement for federation with our Colo-
nies, most of which are committed to Protection. The
subject has a perennial interest, and there is room for a
re-statement both of the historical facts and of the argu-
ments. At no time have the arguments of Adam Smith
needed to be enforced more than in the present age,
when States are vying with one another in attempts to
annex markets for their exclusive benefit and to the
disadvantage of others. That the welfare of one nation
is closely bound up with that of its neighbours is a

* doctrine that cannot be too strongly emphasized in these
days of eager commercial and political rivalries, which

^ seem to threaten a renewal of the old mercantile system.

The aim of the present work is to give in brief compass

an historic account of the origin of Protection, and of the

* j!|)rolonged agitation by which it was ultimately over-
■^'/i thrown in this country; to state the economic advan-

* / tages of the Free-trade doctrine, and to estimate the
b effects of the change upon the well-being of Great

vi Preface.

Britain ; and to discuss the chief grounds on which Pro-
tection is upheld in other countries, and still finds some
adherents in our own. To accomplish this end it was
necessary to trace the rise of the Protectionist idea, as
only by understanding the circumstances of its evolution
can we fully estimate its value as a doctrine and explain
its relation to existing conditions. The first three
chapters, therefore, are devoted to matters antecedent
to the Victorian Era.

While I am convinced of the practical wisdom of the
policy of the " open door " in commerce, and believe that
its adoption by other nations would make for the peace
of the world, I have endeavoured to deal with the subject
in the scientific spirit of inquiry and explanation, and the
conclusions set down are those forced upon me by a
careful and long-continued study of the facts.

On such a subject indebtedness to the work of others
is necessarily very great, and it is impossible to do more
than make a general acknowledgment : special reference,
however, should be made to Leone Levi's History of
British Co7n?rierce, the writings of Prentice and Ash-
worth upon the history of the Corn-law agitation, and
Mr. John Morley's Life of Cobden. I wish also to express
my obligations to Mr. H. J. Tozer, M.A., for sugges-
tions, and to the Editor of the Series for his valuable
criticism and advice.

G. A. S.

London, March, 1898.

Contents

CHAPTER 1

Page

Origin of Restrictions on Trading - - - - p

CHAPTER //
Adam Smith and the Decline of Mercantilism - - -?/

CHAPTER in
Tariff Reform {178^-1838) - - - ' ' ^ ' 39

CHAPTER IV

The Agitation for the Repeal of the^ Corn-laws
{1838-1846:)^ *- - '61

CHAPTER V
The Economics of Foreign Trade - - - '95

CHAPTER VI
Arguments for Protection^ Reciprocity^ Bounties^ &•€. - no

CHAPTER VII
Fifty Years of Free-trade - - . - - - - 130

CHAPTER VIII
Why Free-trade is not adopted in other countries - - 14J

CHAPTER IX
British Agriculture and Free-trade 164

viii Contents

CHAPTER X
The Reaction against Free-trade ----- j88

CHAPTER XI
Recent British Trade and Foreign Competition - - 204

CHAPTER XII
Imperial Federation ------- 224

INDEX - - 241

^

The Free-trade Movement.

Chapter I.
Origin of Restrictions on Trading.

The Free-trade Movement, which had for its aim the
aboHtion of artificial restrictions upon commerce, is
perhaps one of the most remarkable movements of the
nineteenth century, yet one which has been almost con-
fined to the British Isles, although its origin is to be
referred to the teaching of French economic writers of

ithe eighteenth century, from whom Adam Smith, the
lapostle of Free-trade, derived many of his views. This
movement reversed in Great Britain the theories and
practical maxims which had governed the commerce of
nations for centuries. William Pitt had undoubtedly a
strong leaning towards a Free-trade policy. He entered
upon a course of economic reforms by a commercial
treaty with France (1786) and a reorganization of the
customs duties, but the unfortunate war which broke out
in 1793 converted Pitt, the financial reformer, into a
war minister, and brought about events which renewed
and intensified the protective policy he would have
modified. The reaction against protection began afresh
jabout the year 1820 and was extended over some
'forty years, culminating in the Anti-Corn-law agitation
(1839- 1 846). With the abolition of the duties on corn
and navigation in 1849, the principle of free-trading
I was fully established, and by various subsequent reforms
I it was carried out completely, until, in i860, all duties of
f an avowedly protective character had been removed
from the British fiscal system.

le The Free-trade Movement.

Thus Free-trade came to be adopted as the expres-
sion of the correct economic theory of commerce by the
greatest manufacturing and commercial nation of fifty
years ago. It might with some reason be assumed that
a sound theory of international trade would be evolved in
an industrial and commercial age when its advantages
and necessities became more obvious, rather than during
the simpler periods when intercourse was comparatively
slight, or in the times when the relations of nations
were most frequently of a hostile character.

When means of communication were few and difficult,
when people lived mostly by agriculture and population
was small and scattered, natural circumstances and
limited knowledge presented almost insuperable ob-
stacles to trading. The journey of Jacob's sons into
Egypt to fetch corn was an undertaking occasioned only
by necessity; the exchanges of Solomon and Hiram for
the building of the temple were barter transactions on a
scale worthy of being recorded; the visits of the fleets
of Venice to Britain in the thirteenth and fourteenth
centuries were great commercial enterprises, and the
fairs and markets of the Middle Ages were events of
importance in the internal trade of the country; yet
they appear insignificant when brought into contrast
with the wonderfully refined and intricate system of
trade by which the familiar daily wants of life are now
supplied.

Trading, like other institutions, is an example of
evolution. From elementary exchanges it has developed
until the links of commerce now encircle the globe.
Illustrations of the various stages of evolution are still
to be seen in different parts of the world, and some of
them are well marked off by a specific character as local,
national, or international, exhibiting a progressive or-
ganization. Invention and discovery are continually
effecting changes in the methods of commerce, and
possibly a century hence present modes of trade may
seem antiquated.

A theory of trade must be relative to the circumstances
under which it is evolved, and to the economic ideas
prevalent at the time. Thus we may expect the theory

r Origin of Restrictions on Trading. 1 1

of an earlier period to reflect conditions differing much
from those of the present. Modern industry is very
com.plex and highly organized; Free-trading claims to
[ jbe an expression of the recognition of these facts and of
^ 'their true import. But it is a curious circumstance that
while Great Britain, a few of her colonies, and some of
the smaller commercial countries of Northern Europe,
have adopted the principle of free exchange and have
renounced the protective system, other great industrial
nations still retain the artificial restrictions on trade
which were once general, and some, like the United
States, are extending those imposts against other
countries, although they have at the same time generally
removed all barriers to free-trading within the areas
comprised by their political boundaries. The practice
of creating obstacles to the full enjoyment of free ex-
change beyond the limits of a country, whilst recogniz-
ing the advantages gained by the removal of such im-
pediments to trade within a country, forms a curious
paradox, on which some light is cast by a review of the
conditions under which trading was developed.

In an inquiry into the origin of restrictions on trade
and their economic effects, we are naturally led to com-
pare the civilization and economic conditions of the
present and the past. The first fact that strikes us is
the extraordinary complexity of modern life in its inter-
ests and its industrial and commercial relations, its
interdependence, variety, far-reaching intercourse and
cosmopolitan character, when placed in contrast with
the simplicity and local independence of more primitive
times. The world has in fact become one vast market
or economic area. Science, by its marvellous command
over the subtle forces of nature, has succeeded in reducing
the natural obstacles to intercourse, and in so abbreviat-
ing operations of trade that the products of each country
can now be distributed with wonderful celerity over the
whole globe, and all nations may share in the advan-
tages which each can offer. On the one hand, the tele-
graph and post have rendered communication quick and
constant, and on the other, steam-power has made
transport simple and inexpensive. Intercourse between

12 The Free-trade Movement.

London and Japan or Australia is far easier now than
between the extreme north and south of Great Britain a
few centuries ago. The natural result has been an
enormous interchange of goods, trading on a gigantic
scale has been established, and nations have learned to
appreciate the advantages to be gained by this enlarge-
ment of the field of their economic operations.

Free-trading, which appeals to the commercial in-
stincts, and makes for peace and increased comfort,
would seem to be the logical outcome of this close inter-
dependence. The reduction of natural impediments to
simplicity of trading might be expected to be accompanied
by the removal of artificial barriers, and yet the latter
are retained. To remove the one and retain the other is
an apparent contradiction which calls for explanation.
The causes appear to be threefold, and may be summed
up briefly as (i) the prejudices derived from ancient esta-
blished customs ; (2) the existence of national sentiment,
which, on its negative side, is hostile to foreign ideas
and jealous of foreign goods; and (3) the individual and
class interests which grew up and were nourished under
the shelter of the artificial barriers to foreign competi-
tion created by those prejudices and jealousies.

( For the roots of protection we must look back into

; the early history of trading.

Before the Christian era the Phoenicians are said to
have come to Britain for tin. Under the Roman occu-
pation of Britain agriculture was developed, corn as
well as metals was exported, and London became a
port of some magnitude. In Saxon times such com-
merce as existed was conducted mainly by foreign mer-
chants. English kings endeavoured to stimulate trading,
as is proved by the law of Athelstan, that a merchant
who thrice crossed the sea in his own vessel should
become a thane. Norman rule led to further intercourse
with the Continent, and the crusades brought Britain into
commercial relations with the city-states of the Mediter-
ranean. Trade sprang up, and from 13 17 to the middle
of the sixteenth century Italian fleets came to England
and the Netherlands with fine cloth, silks, linen and
cotton goods, glass, Greek wines, silver, and other

Origin of Restrictions on Trading. 13

luxuries, which they exchanged for the grain, leather,
wool, skins, and metals of England.

German traders from Hamburg and Liibeck early
gained a footing in England, and established here a
branch of the Hanseatic League. This was a federation
for commercial purposes which became very powerful in
the thirteenth and fourteenth centuries, and controlled
the trade of the north of Europe. It extended from
Bergen to Cologne, and from London and Bruges to
Novgorod; by the year 1300 it had factories in about
seventy towns. The league gained many privileges, in-
cluding immunity from taxes; it organized trade, put
down piracy, developed industries, and educated the
nations in the art of commerce. To England it brought
timber, furs, flax, hemp, fish, copper, &c., in exchange
for native produce.

Customs or customary duties have a very ancient
origin; they seem to have been paid from time imme-
morial on merchandise entering a district, country, or
town. As tolls or transit dues, charges were made for
the use of roads, safe passage, and permission to trade.
The duty was supposed to fall upon the traders, who
were generally foreigners, and it became a source of
revenue to the lord or sovereign. In the early custo-
mary dues in England there appears no trace of any
economic or national aim other than revenue and a
charge for the privilege of trading.

From the twelfth to the fifteenth century the local
trade of towns was regulated by the merchant and craft
guilds; these institutions served at the time a most useful
purpose ; municipal control of trade seems to have been
general and beneficial, though at a later period it de-
generated into a close monopoly and became the privi-
lege of a few.

Under Henry III. (1216) there was a great influx of
foreign merchants, and trade with Flanders increased ;
wool was exported and manufactured woollens imported.
Under this king was established the system of stapling^
which for several centuries determined the markets for
the home and foreign trade in certain staple products,
of which wool was the most important. Such goods

14 The Free-trade Movement.

were required to be sent to certain towns, called staples,
for sale. It was thought that trade could be thus more
easily supervised and regulated, and the customs duties
could be more readily collected. This system flourished
through the thirteenth and fourteenth centuries. A
statute of Edward III. (1354) enumerates ten staple
towns in England, and gives the customs duties payable
on the goods there to be sold. These towns paid taxes
for the monopoly which they enjoyed. Various foreign
staples were appointed for the foreign trade, such as
Antwerp, Bruges, and Calais, to which English wool,
leather, &c. , were sent. The system declined under the
Tudors from the competition of the merchant adven-
turers, and practically came to an end with the loss of
Calais in 1558.

Export duties were first regulated by Act of Parliament
in 1275 under Edward I., when the duties on wool,
leather, and metals were fixed for revenue. This tax
was known as *'the great customs". In 1303 the tax
was imposed upon both imports and exports at an
increased rate, on the ground of the protection afforded
to traders, and the rate was fixed at 3^. in the ;£" ad
valorem on all kinds of merchandise. A further revision
followed in 1376 (Edward III.) when tonnage and pound-
age exacted on wines and merchandise (whether im-
ports or exports) was granted as a subsidy to the king,
and the tax became from this time a regular part of the
revenue system.

Previous to this reign no particular economic dis-
tinction seems to have been drawn between taxes on
imports and exports; revenue appears to have been the
chief aim. But under Edward III. Flemish weavers
were encouraged to settle in England and follow their
industry; direct attempts were made at fostering home
industry, and some restraints on the export of wool
began to be adopted. Modifications of the duties made
subsequently by Parliament point to the growth of the
idea of checking the export of raw materials and limiting
the import of manufactured goods. Thus, in 1463,
Edward IV. prohibited the importation of wrought
goods in the interests of English artificers ; this act was

Origin of Restrictions on Trading. 15

renewed under Richard III., and, as late as the eighteenth
century, was commended as a most beneficent piece of
legislation.

Later still, under the Tudors, duties on imports were
increased, and exports were prohibited under penalties.
In Elizabeth's reign it was made a capital offence if a
man for the second time exported wool or English rams.
The preservation of the raw material for home indus-
try, and the export of the manufactured article, were
coming to be recognized as a distinct policy; the pro-
tective idea was gaining ground. Under Charles II.
hides and leather were added to the prohibited exports,
and the instruments of industry were also placed under
like restraint in order not to give to foreign manufac-
turers any advantage which might be reserved for the
home producer.

Under these regulations the number of taxed articles
had increased greatly, and the system of customs ad-
ministration had become very intricate and troublesome
to merchants.

Import duties were originally levied on the declared
value of the merchandise, but in 1558 a "Book of Rates"
was drawn up, enumerating the articles and specifying
how each should be valued for customs purposes. This
book, an anticipation of a tariff, was revised on several
occasions with a view to increasing the revenue. In
1662 the Rate Book enumerated 11 39 articles of import
and 2 1 2 of export.

The regulation of trading by privilege, charter, staple,
and prohibition was in accordance with the general
ideas of the age, derived from the system of universal
control in feudal times, under which most of the economic
relations of life were determined by custom and autho-
rity. Of the same nature were the interferences with
freedom of labour, of which the Conspiracy Act (1304),
the Statute of Labourers (1349), and the Apprenticeship
Act of Elizabeth (1563), are examples. In other direc-
tions the belief in the right and capacity of regulation
from above was illustrated. As home-trading increased,
a class of middlemen or dealers had been evolved ; and
it was thought desirable in the interests of consumers to

i6 The Free-trade Movement.

limit their operations and restrain the action of com-
petition, which was then little understood. Thus by
acts ( 1 551-1552) forestallers, regrators, and engrossers
were forbidden to buy goods or victuals for resale in the
same market or locality. These acts aimed at moder-
ating the prices of necessaries, and also the profits of the
dealers in corn, fish, wool, &c.

Money came under legislative control at an early
period. Acts were passed forbidding the export of
gold and silver, lest there should be an insufficiency of
currency, and for fear the royal treasure should suff"er
depletion. An act of 1307, prohibiting the export of
gold, is said to have led to the introduction of bills of
exchange. A later act of Richard II. imposed severe
penalties on the export of gold or silver without a license:
" For the great mischief which this realm suff'ereth and
long hath done, that gold and silver are carried out of
the realm, so that in eff'ect there is none left thereof,
which thing if it should longer be suff"ered would shortly
be the destruction of the same realm, which God pro-
hibit". Under Henry VIII. (1512) an act was passed
**that all persons carrying over sea any coins, plate,
or jewels, shall, on detection, forfeit double their value".

Trade with Flanders greatly increased in the fourteenth
and fifteenth centuries. In 1496 Henry VII. entered
into a commercial treaty with the Netherlands (The
Intercursus Magnus), which, b)'^ mutual concessions,
aimed at freeing and extending the trade between the
two countries. The prosperity of the fifteenth century
stimulated English merchants to enterprise ; they organ-
ized themselves into trading companies, of which The
Merchant Adventurers gained a charter in 1501. The
energy of these traders brought them into conflict and
rivalry with the Hanse traders, and finally led to the
withdrawal of the charter of that corporation in 1597.

This impulse to British enterprise coincides with the
rise of a policy which professed to make trading sub-
servient to national welfare, by securing native industry
and commerce against foreign competition, by increasing
national resources and strengthening national industries.
A variety of circumstances in the sixteenth century

(M460)

Origin of Restrictions on Trading. 17

favoured the growth of the national spirit and desire for
national greatness. The discovery of the New World
(1492), and of the Cape route to India (1498), opened up
larger ideas of commerce and new fields for enterprise.
The consolidation of states under more settled govern-
ment and institutions, the Reformation movement, and
the revival of learning, all tended to awaken new senti-
ments of national life. The accession of treasure to the'
first conquerors of the New World suggested to others
fresh sources of wealth. The sack of Antwerp, in 1585,
diverted a portion of her trade to London, and sent over
a number of Flemish skilled artisans, to the advantage
of British manufactures and trade.

Thus there grew up in the reign of Elizabeth a feeling
from which developed a national policy ; the aim of this
policy was to make England great, powerful, and wealthy.
This object was to be accomplished by the creation of a
strong navy, the acquisition of new territory by planta-
tions (or colonies), and the development of national re-
sources, and the increase of a treasure in gold and silver
for the purpose of defence and warfare.

A like enthusiasm had seized upon other nations, and
patriotism in the circumstances was displayed in hostility,
in jealousy, and menaces, in struggles for maritime
supremacy and commercial monopoly. The regulations
imposing restrictions upon foreign trade were increased,
and progressive nations in the seventeenth century all
adopted the policy of harassing one another's com-
merce.

Under Elizabeth the spirit of enterprise and monopoly
gave rise to the formation of a large number of trading
companies, which obtained charters for the purpose of
acquiring the sole rights of trading in certain parts.
The Russia Company, 1553; the Baltic Company,
1579; the Levant Company, 1581; the Guinea Com-
pany, 1588; the East India Company, 1600, were all
formed on this principle of ** authorized trading". Their
charters conferred upon these companies the exclusive
privilege of trading in specified districts, and from such
parts other traders, called "interlopers", were inter-
dicted. The risks incurred in opening up new trade

(M460) B

i8 The Free-trade Movement.

formed an argument for these monopolies; they were held
to be useful in promoting trade in unsettled and danger-
ous parts, as Adam Smith admits, ''by making at their
own expense an experiment which the state might not
think it prudent to make". The privileges, however,
in time became an abuse, they were attacked in the
seventeenth century, and were ultimately withdrawn.

The "national policy" which grew up towards the
latter part of the sixteenth century developed a theory
of trade known as **the mercantilist theory"; which
dominated foreign trade relations in the seventeenth
century, and almost to the end of the eighteenth century.
This policy was deemed to be an advance upon earlier
principles of trading, inasmuch as it professed to be
based upon a regard for the commonwealth, and to seek
the public good. Its acceptance as a public policy pre-
ceded its formulation as an economic theory, and the
popularity of the theory, when put forth by Thomas
Mun in 1664, was due in some degree to the fact that
it seemed to give a scientific explanation of trading in
accordance with the popular sentiment of the times.

The history of the seventeenth and eighteenth cen-
turies is largely a record of struggles for commercial
supremacy, for the acquisition of new territory and the
control of markets. Wherever colonies were planted
exclusive trading was established. During the seven-
teenth century the Dutch enjoyed the position of the
leading commercial nation; they possessed the largest
fleet, and had a vast carrying trade. Against them
the Navigation Acts of England (1651 and 1660) were
directed, with the view of injuring their trade and ex-
tending our own maritime power. Notwithstanding the
jealousy of Holland, the English copied her methods,
and carried on a large trade with her, which amounted
in 1703 to ;£^2, 250,000 in exports, mostly of wool. Dur-
ing the seventeenth century the English foreign trade
increased from ;^4,628,ooo to ;^i 1,170,000. Between
France and England protection was rife; under the
guidance of the minister Colbert, France in 1664
adopted an almost prohibitive tariff, and England in
1678 retaliated by prohibiting the import of French

Origin of Restrictions on Trading. 19

goods, and also the export of wool, raw materials,
metals, and implements.

Under the mercantilist system an exaggerated import-
ance was attached to the possession of gold and silver.
Money had gained prominence with the increase of trad-
ing, but its true functions were not yet clearly under-
stood. It was seen that the precious metals were in
universal demand, they were always acceptable in pay-
ment for goods, and wealth was commonly estimated in
terms of money. The countries which were receiving
supplies of the precious metals from the New World
had increased their trade, and were enabled to purchase
commodities from others. Spain and Portugal for a
time appeared to be the proprietors of great wealth.
Many circumstances favoured the belief that the precious
metals were pre-eminently desirable imports; and
measures were adopted to promote their acquisition.
Had the influx come about by natural causes, it might
have been regarded as an index of prosperity, since the
precious metals, like other desirable things, flow to
countries in which other forms of wealth are abundant;
but an artificial accumulation of money could only take
place by surrendering other forms of wealth, as the
miser adds to his hoards by denying himself more need-
ful things. Under the delusion that a country profited
by increasing its stock of gold and silver, nations strug-
gled to obtain possession of these metals, and their
commercial regulations were framed with that object.
Exports were encouraged by bounties, imports of useful
goods were checked by duties, trading was regarded as
injurious to the country if it tended to draw away money,
and the advantage of a year's trading to a country was
measured, not in the increase of useful commodities
gained thereby, but in the increase of precious metals
which were gained as a "balance of trade". Exporting
was thus regarded as more profitable than importing;
the mutual advantage of exchange between countries
was obscured, and by directing the attention to the
mere instrument or mechanism of exchange the one
country was supposed to lose in trading what the other
gained.

20 The Free-trade Movement.

It was also contended that money was a means of
employing labour at home, and that the export of
bullion was so much money lost as regards that pur-
pose. The business of foreign trade was held to con-
sist in securing markets, and in exporting thither home-
produce, the advantage being measured by the amount
of the '* favourable balance" of treasure. A fundamental
economic truth did underlie this argument, namely, that
the production of native goods by industry is the real
source of wealth, but it was accompanied by a great
misconception as to the nature of the advantages gained
by trading. These arise from the utility of the goods
received in the exchange, and not from the acquisition of
money, which may even flow in in such quantities as to
be in excess of the requirements of the nation. Mer-
cantilists have sometimes been represented as holding
the vulgar error that money was the only wealth. This
was not so ; their error lay in estimating the advantage
of foreign trade by the amount of precious metals it
introduced, and in neglecting the benefits to be gained
by the increase of useful and desirable goods in exchange
for their exports. On this point the opinion of John
Locke is instructive. He writes: ** Gold and silver
being little useful to the life of men in proportion to
food, raiment, and carriage, has its value only from the
consort of men"; and Boisguillebert, even more dog-
matically: **It is very certain that money is not a value
in itself, and that its quantity adds nothing to the wealth
of a country".

In a pamphlet published in 1664 by Thomas Mun,
called England's Treasure hy Foreign Trade, the mer-
cantilist theory of trading is explained **to consist in
keeping imports less than exports, thus to secure a
favourable balance, and provide an abundance of money
which could be drawn upon in time of need". The
balance of actual money was advocated in the seven-
teenth century mainly as a means of providing a treasure
for the purpose of national defence. This argument had
some weight in an unsettled and warlike period, when
bullion was scarce, and the metals were almost the only
means of currency. In the eighteenth century, after the

Origin of Restrictions on Trading. 21

loaning system had arisen, and it was no longer deemed
necessary to put by stores of money for national pur-
poses, the balance of trade came to be regarded as the
measure of the prosperity of industry. The practical
measures urged by Mun to carry out his theory were
prohibition of the export of gold and encouragement of
its import, encouragement of exports of goods, and dis-
couragement of all imports except the raw materials of
industry. Systems of tariffs and regulations were de-
vised as the machinery to carry into effect this policy,
out of which grew up the protective system. Smuggling,
as a means of evasion, soon followed, and contraband
trade grew into a regular institution. In course of time
the encouragement of manufactures became a more
deliberate aim, and the system was pursued with the
object of maintaining the prohibition of finished goods,
of directing consumption at home, and of stimulating
new home industries. The principles which directed the
commerce of the eighteenth century embodied in a large
degree the chief doctrines of protection as it has been
advocated in the present century, and the arguments
then advanced in its defence are commonly repeated in
the proposals of to-day.

One of the devices of the mercantile system was the
promotion of commercial treaties, by means of which it
was thought a vent for surplus goods was obtained and
some exclusive advantage acquired. England, for ex-
ample, in 1703 arranged a treaty with Portugal (called
the "Methuen Treaty", after its negotiator) in order that
she might secure some of the silver which Portugal was
importing from Brazil. England undertook to lower her
duties on port-wine on condition that Portugal admitted
English woollen goods at lower rates. The treaty was
approved in England as much from jealousy of France
and the expected increase of bullion by the ** balance of
trade" as from anticipated advantages to the woollen
trade. England consumed more port and less French
burgundy, and the capital of Portugal was directed in a
larger degree to the cultivation of the vine. But treaties
of this exclusive character always offend some other
nation by the diversion of trade, and the Methuen treaty

22 The Free-trade Movement.

annoyed France by the injury it caused to her wine trade.
Less than a century later, with Pitt's treaty of 1786,
commercial treaties begfan to be framed on a better
basis, and so as to procure a real reduction of duties
between the contracting nations without any attempt at
injuriously affecting the trade with others.

When colonization opened up new fields of enterprise
to European nations, they applied to the colonies which
they acquired the principles of restriction practised in
their trade with one another. By the mercantilist
statesmen, colonies were treated as the property of the
nations which gained them, and their markets and pro-
ducts as the exclusive monopoly of the sovereign nation,
and they were allowed no commercial intercourse with
foreign nations.^ This **sole market" policy, known a^
the colonial system, was adopted by Great Britain in her
relations with the American colonies. It impeded their
development, though it was argued that the colonies
profited by the defence and credit of the mother-country.

Their industries were regulated so as not to compete
with the market for goods which they provided for the
home industries, their shipping was controlled, and
ships built in the colonies were even required to be
equipped with sails from England. Even Ireland was
included in the system of industrial and commercial
restraint. From the year 1660 the importation of meat
and dairy produce from Ireland was prohibited in Eng-
land as adverse to English agriculture, and when this
discouragement to cattle-farming had led to the sub-
stitution of sheep-farming, Irish wool was excluded
from English markets.

This development of the ** national policy" brought
its natural fruit in smuggling, and discord with the
thirteen American colonies, and finally led to the
struggle which secured these colonies their independence.
The issue of that conflict, together with the growth of
the more enlightened ideas of commerce which had been
advanced by Adam Smith, led to the abolition of the
colonial system by Great Britain, and, at a later period,

^ See Wealth of Nations, book iv. chap. 7, for a full account of the
"colonial systeni '.

Origin of Restrictions on Trading. 23

to the complete commercial independence of her colonies.
Other nations (Holland, Spain, and France) did not
follow the policy of Great Britain in this respect.

It has often been advanced as a defence of mercan-
tilism that it was a necessary phase in the development
of nations ; at a critical period in their growth, it is said,
statesmen availed themselves of national sentiment by
these means to strengthen national life and give it form
and character; and only thus could it have been nur-
tured and sustained. Herr SchmoUer, a representative
of the historic school of economists in Germany, states
this view in his valuable monograph on Mercantilism.^
He says: *'The statesmen who put into form their
theories gave the economic life of their people its neces-
sary basis of power, and a corresponding impulse to its
economic movement, and they furnished the national
striving with great aims. At a time when most ad-
vanced nations were carrying on the collective struggle
for existence with the harshest national egoism, with all
the weapons of finance, of legislation, and of force,
with navigation laws and prohibitive laws, with fleets
and admiralties, with companies, and with a trade under
state guidance and discipline, those who would not be
hammer would assuredly be anvil."

The assertion is that mercantilism was in keeping
with the spirit of the age. Two questions arise: (i)
Was it an unavoidable part of the ''national policy" for
making nations strong? and (2) Was it economically
beneficial? With regard to the former, it must be
granted that when the struggle of nations for individual
life, and for security and strength, was intense and
critical, and while a very jealous and military spirit was
the dominating influence, a system of trading framed
upon a peace basis was impossible; and it is probable
that, as Herr Schmoller suggests, the nations that would
not adopt the methods of the stronger powers would
have been crushed by them. Historically, the ** national
policy" of strength was an important phase in the
growth of nations ; but whether its commercial develop-

^ The Mercantile System and its Historical Significance, by Giistav
Schmoller.

24 The Free-trade Movement.

ments were also necessary is a different question. The
elaborate system of restrictions and regfulations, the
struggle for the possession of money, the rejection of
the advantages of exchange, could scarcely have contri-
buted either to national life or to national wealth. The
fact is, that, at a period when economic investigation
had made little progress, the harshness of the struggles
for empire and power was transferred to the domain of
commerce. Trade was made an instrument of warfare,
or was sacrificed to political rivalry. Tariff struggles
grew out of national jealousies, and helped to set up a
system of international barriers, which in time grew
into a protective policy, and came to be regarded as
beneficial to the nation. Mercantilism was a product of
certain conditions of the age; it was in accord with the
general sentiment, and also with the common beliefs, of
those times. That its methods were economically pro-
fitable to the nation at any time is, to say the least, very
doubtful.

Free-trading may be regarded as a particular case of
general freedom of action; and this freedom all history
shows to have been of very gradual growth. Sir Henrj-
Maine holds that "the evolution of society has been
from status to contract". Herbert Spencer states the
same fact in another form when he asserts that "pro-
gress has been from communism to individualism ".
All early history exhibits society graded, regulated by
custom, and bound down by habit and tradition. The
history of England since the Norman Conquest is a
record of progress from serfdom and feudalism to free
institutions.

" Freedom slowly broadening down
From precedent to precedent",

and very slowly did this freedom reach the majority.

Only after centuries of servitude was the right of self-
government attained, but step by step through the
centuries political freedom advanced until finally it has
filtered down and has become the inalienable heritage
of the mass of the people. In religious matters the
country long suffered from the domination of the Church,

Origin of Restrictions on Trading. 25

and it required years of struggling- after the Reforma-
tion period before religious freedom and equality were
fully admitted and understood. Freedom of opinion —
of speech and of the press — was long denied, and was
only attained by slow and painful degrees. Freedom of
discussion and the formation of public opinion by open
debate are constitutional safeguards, for men resort to
revolutions only when the privileges of free citizens are
denied them in order to bring about reforms. The
diffusion of knowledge was a further stage in the advance
of freedom. In the Middle Ages learning was the mo-
nopoly of monastics and clergy, at a later period the
privilege of the richer classes; in modern times educa-
tion is the opportunity of all, and it is even forced upon
unwilling people. Knowledge has been truly called the
greatest leveller ; monopoly and privilege will be doomed
when all classes are educated.

Economic freedom came most slowly of all, and is not
yet fully attained. The reason is, that it is dependent
upon other forms of freedom, and could not precede
them. The fetters of ignorance must be removed, as
well as social and political disabilities, that men may
understand and exercise their freedom in pursuit of their
own interests. It was comparatively easy to perceive
the injury and injustice of laws fixing wages and .re-
straining men from combining to ask for higher rewards.
But it requires a long course of education to make the
masses understand that institutions, such as protective
tariffs, which they had been accustomed to regard as
natural, and which they had been taught to believe
beneficial to themselves, are only impediments to liberty
and causes of diminished well-being. To effect this

( change in public opinion was the special task to which
the prime movers in the Anti-Corn-law agitation

! devoted themselves ; and it is one of the most notable
features of the Free-trade movement that its chief
victories were achieved by a small body of thinkers,
I who had imbibed large views of constitutional freedom
and of personal and economic liberty. They finally
succeeded by their persistence in educating, and in con-
verting to their opinions, not only manufacturers, factory

26 The Free-trade Movement.

workers, and agricultural labourers, but even farmers
and land-owners, the prime minister and the House of
Commons itself.

' The repeal of the Corn-laws determined the Free-
trade policy of this country, which is commonly dated
from 1846, though it was a policy advocated in the
previous century by Adam Smith, foreshadowed in the
treaty of 1786 by Pitt and by his reforms, actually

i commenced by Huskisson in 1823, and practically
adopted by Peel in the budget of 1842. Since the
abolition of the Corn-laws, tariffs have proceeded on
Free-trade lines ; the policy of remission of duties was
checked for a time by the Russian war, but it was after-
wards resumed, and our fiscal system now contains no>^ j
protective element, although it raises ;^2 1,000,000 from)—
duties on imported goods, mainly tobacco, wine, spirits/
and tea.

For some years after 1850 there were hopes that a
Free-trade policy would be adopted by other countries;
but a reaction followed the period of the Franco-German
war, and the protective spirit has since been revived
amongst most of the leading commercial nations. Our
own country has remained firm in its Free-trade prin-
ciples, though the wisdom of its isolated policy is often
called in question. Up to the present, the great pros-
perity which has been so marked since the complete
acceptance of the doctrine has been powerfully in its
favour; and, though often assailed, the arguments on
which free-trading is based have not been overthrown.
The following chapters aim at tracing briefly the leading
points in the history of the controversy, the results of
its adoption, and the present position of Free-trade in

' Great Britain and the countries with which she is most

j intimately connected by commerce.

Adam Smith and Decline of Mercantilism. 27

Chapter II.

Adam Smith and the Decline of Mercantilism.

The overthrow of mercantilism is usually attributed to \
Adam Smith's monumental work, The Wealth of Natio7is ^ .^^
published in 1776; but the revolt against the restraints
and regulations which that system imposed upon industry
land commerce commenced much earlier. The conditions
/under which it had been developed had changed materi-
ally by the middle of the eighteenth century; the econ-
omic problems then arising were of a different order,
and methods of economic inquiry were making some
progress. In France, writers of the Physiocratic School
of '* Economistes" — its founder Quesnay (1768), and
Turgot, minister of Louis XVI. (1774- 1776) — had advo-
^<iated complete liberty both in home and foreign trade;
their demands for freedom of competition were a protest
against impediments to trade on behalf of those who
suffered from the evils of restriction and high prices.
The negative principle of laissez -fairer laissez- passer^
which they set up as a scientific maxim, sums up their
views of the functions of the State in commercial and
industrial matters. Adam Smith owed something to the
teaching of the Physiocrats on ** natural liberty", though
he criticised their views respecting the origin of wealth.
Mercantilism was also being questioned by writers on
economic subjects in Great Britain, and the opinion that
greater freedom would be beneficial was not confined to
theorists ; the idea that the abolition of duties would be
good for trade was gaining ground, and found expres-
sion also among men engaged in commerce. Sir James
Steuart's dictum, "that it is the combination of every
private interest which forms the public good, and of this

^ The phrase laissez-faire originated in the seventeenth century in the re-
action against the attempts of the great French minister Colbert, to foster
industry by a system of state regulation and protection against foreign
countries. As a policy of non-interference with industry and trade, it was •
adopted by the Manchester School of economists and politicians a centur)'
later, and became their characteristic doctrine.

28 The Free-trade Movement.

the public, that is, statesmen, only can judge" contains
the germ of Adam Smith's reform in political and econ-
omic theory, although it relegates to the politician what
is at all events in part the function of the economist. ^

In the century prior to Adam Smith, statesmen had
given but little attention to the effects of legislation upon
individual welfare; their leading idea was to formulate
a policy for advancing national greatness and obtaining
public revenue; the ultimate end of statecraft was
centred in national strength and defence. Hence the
importance they attached to a store of treasure and to
an increase of money as supplying the sinews of war.
The legislature busied itself with measures for increasing
the produce of the land as a source of national revenue,
with the regulation of commerce, so as to secure a
favourable balance of trade and a net importation of gold
and silver, and with the encouragement of exports, and
the provision of markets for their disposal. The econ-
omic aspects of this ** national policy" were rather over-
shadowed by the political ; the importance of individual
enterprise in creating the fund from which revenue is
raised was undervalued.

It is Adam Smith's peculiar merit that he directed
economic legislation towards ** the welfare of individuals
and homes". He gave emphasis to the idea of wealth
"as a means of plentiful subsistence for the people".
To this end he urged that the energies of statesmen
should be mainly directed, subordinating thereto the
supply of revenue for the public service, of which there
would be no lack in a prosperous state. Adopting the
view of De Gournay, '* that private interests are identical
with public interests", he maintained the rights of indi-
viduals to dispose of their labour and its fruits in the best
market they can find, and to make, without hindrance, the
best bargains they can for themselves in their exchanges.

*J. Steuart, An Inquiry into the Principles of Political Economy (1767).
Daniel Defoe, also, writing in Z-ft^ il/(frra/or at thebeginning of the eighteenth
century, had stated very lucidly the real advantages of trading between
nations. "Trading", he says, "is a matter entirely independent in its
nature, and neither consults other interests nor depends on any interests but
what relate to itself." And again, "the language of one nation to another
is, I let thee gain by me that I may gain by thee".

Adam Smith and Decline of Mercantilism. 29

The discovery of a great scientific principle usually
takes place only when the time and circumstances are
ripe for its revelation, but it requires a mind of excep-
tional genius to grasp the situation, to discern the
principle involved, and to enunciate the new truth in
a manner at once lutid and forcible, in order that it
may gain acceptance from a public biassed by old
beliefs.

The doctrine of '^ natural liberty" — that the national
welfare depends upon the exercise of personal freedom
in the ordinary business of life by the individuals who
compose the state — was of the nature of a discovery in
the sphere of political thought, and its application to
practice has profoundly affected the course of history.
To John Locke {Civil Government) the idea of political
freedom was mainly due, and Montesquieu (Esprit des
Lois) had enforced the same doctrine. Adam Smith
grasped its force, and gave it application in the domain
of economic relations. From his time economics began
to be treated as a distinct branch of science, and inquiries
into the nature and causes of wealth and of its distribu-
tion came to be regarded as more and more important
in promoting the welfare of men, both as individuals and
as citizens.

Locke had already commented upon the importance of
labour in the production of wealth, and Gregory King
had emphasized the function of capital in providing a
fund for employing labour; Adam Smith demanded that
both should be freed from trammels. Capital had al- ^
ready gained some degree of liberty; the trading cor-
porations were declining; new towns were growing up
in which the restraints of the old municipal corporations ^'
were absent; the usury laws were becoming obsolete;
and monopolies granted in connection with certain in-
dustries at home, or conferring special privileges in
foreign commerce, were tending to lapse. Labour, how-
ever, suffered from many disabilities imposed by com-
bination acts, settlement acts, and other impediments to
free movement. The whole system of restraints had
operated most disastrously for the weaker classes, and
the time was ripe for the promulgation of a system of

30 The Free-trade Movement.

*' natural liberty" in matters affecting trade and industry
as set forth by Adam Smith.

Whether, as is maintained, this point of view was un-
attainable at an earlier stage in the growth of nations is
a question which scarcely admits of a definite answer;
but it is certain that the previous policy had not only
impeded industry at home, but had kept up national
animosities, and had built up cumbrous systems of com-
mercial legislation, which restricted the development
and production of wealth.

By separating the economic problem from the political
for purposes of investigation, the conditions favourable
to the advance of material welfare were more clearly
discerned, and the progress of the masses during the
past century has been furthered in no small degree by
the practical application of the economic principles thus
elucidated. Legislation also became more humanitarian
when the idea had been fully grasped that the well-being
of the individuals of which the nation is composed is the
true aim of government, that national power and national
revenue should subserve this end, and that the removal
of legislative hindrances to freedom of action was one of
the best means for the attainment of human welfare.

The argument of The Wealth of Natiotis embodied a
further idea, which was novel at the time, and which has
by no means been universally grasped even yet, namely,
that the mutual dependence of nations is a factor in their
individual progress, and that exclusiveness is unfavour-
able to full national development. This doctrine, a pro-
duct of the scientific inquiry into the nature and origin
of wealth, had a universal application; it tended to
remove some of the causes of international jealousy and
rivalry, and to promote more cordial relations among
^ nations by the recognition of common interests. Under
the theory of mercantilism, nations were considered
necessarily antagonistic to one another; they were al-
ways in a state of war or preparing for it,^ and to attack

^ ' • Commerce, which ought naturally to be, among nations as among indi-\
viduals, a bond of union and friendship, has become the most fertile source \
of discord and animosity. The capricious ambition of kings and ministers /
has not, during the present and preceding century, been more fatal to the /

Adam Smith and Decline of Mercantilism. 31

or impede the welfare of other peoples was regarded as
a chief means of promoting their own. The fiscal policy
which these measures entailed injured themselves not less
than their rivals. The tendency of the new doctrine was
to remove these restraints and burdens, and to foster a
spirit of amity in place of the jealousy which prevailed
between nations. That the greatest possible liberty of
action would conduce to the comfort and progress of the
people came to be regarded as an economic maxim,
which was progressively adopted by statesmen. The
analysis of wealth and commerce performed by Adam
Smith made entirely for peace, by exposing fallacies
which had been the cause of many conflicts. His atti-
tude towards trade was cosmopolitan, but not the less
patriotic. He felt that economic advantages are not
fully secured within political limits. With scientific in-
sight he saw that commerce benefits all mankind, and is
not merely a device for obtaining gain for one nation at
the expense of others. He recognized that consumable
goods were what nations required, and what they could
obtain by free exchange, and that gold and silver were
only the instruments of this exchange. He perceived
also that no special efforts on the part of governments
were necessary to procure the precious metals, since, as
the instruments of commerce, they would necessarily
follow its movements, and that freedom of commerce
would lead to an adequate supply of gold and silver in
countries which did not produce them.^
, The economic evils of restrictions upon commerce
were very forcibly set forth by Adam Smith; they
checked the growth of wealth, and tended to impoverish
the people by excluding desirable commodities ; bounties
upon exports only forced special industries artificially
at the cost of the community, while checks on the

repose of Europe than the impertinent jealousy of merchants and manu-
facturers" ( Wealth of Nations, book iv. chap. 3),

^ Ricardo states this doctrine very clearly in his Principles of Political
Economy and Taxation, 3rd edition, p. 143: — " Gold and silver having been
chosen for the general medium of circulation, they are, by the competition
of commerce, distributed in such proportions amongst the different countries
of the world as to accommodate themselves to the natural traffic which
would take place if no such metals existed, and the trade between countries
were purely a trade of barter ".

32 The Free-trade Movement.

export of machinery injured the machine-makings in-
dustries, besides destroying the mutual advantages of /
exchange. Taxes on food, either home-grown or im-
ported, were, as Adam Smith said, *'a curse equal to
the barrenness of the earth and the inclemency of the
heavens ", and an attempt to destroy or reject nature's
free gifts. As he suggests in his criticism of the Corn-
laws, " were all nations to follow the liberal system of
free exportation and free importation, the different "\
states into which a great continent was divided would
so far resemble the different provinces of a great
empire".^ But so numerous were the restrictions upony*
external trade in his day, so powerful the interests
which profited by them, and so deep-rooted the belief
in the efficacy and necessity of this State control, that
Adam Smith had little expectation that the principles he
advocated would ever be realized in practice. In his
own words: ''To expect, indeed, that the freedom of
trade should ever be entirely restored in Great Britain is
as absurd as to expect that an Oceana or Utopia should
ever be established in it. Not only the prejudices of
the public, but, what is much more unconquerable, the
private interests of many individuals, irresistibly oppose
it." 2 This quotation substantially expresses the reasons
many other nations still refrain from adopting the
Free-trade policy. Adam Smith considered that "free-
dom of trade should be restored" in such cases **only
by slow gradations and with a good deal of reserve and
circumspection", since its sudden adoption would destroy
the protected industries, and ''deprive all at once many
thousands of our people of their ordinary employment
and means of subsistence".

Although the system of protection prevailing when
Adam Smith wrote had originated in a measure of
public policy, it had fostered mainly the interests of the
trading and mercantile classes, for whom it endeavoured
to secure a monopoly of markets. Adam Smith himself
attributes its rise to "the clamour and sophistry of the
merchants and manufacturers ", who had possessed
much influence with the Government from the time of

1 Wealth of Nations, book iv. chap, 5. • Ibid, book iv. chap. a.

/why
V Free

Adam Smith and Decline of Mercantilism. 33

the Revolution, and had induced a belief among the
ruling classes and land-owners that it was in the public
interest to check the export of wool and to maintain
protective duties.^ As yet agriculture had not gained
much from protection. For fifty years prior to 1765
Great Britain exported corn; importation then began,
but the duty on wheat was reduced in 1773 to only 6d.
per quarter when the price rose above 48^. The land-
lords of the eighteenth century had devoted themselves
energetically to developing the resources of the soil;
they had sunk much capital in their estates, and had
shown great enterprise in the introduction of new
methods and new products from Flanders. The cen-
tury was one of great progress in agriculture. It should
be remembered that the criticism of Adam Smith upon
mercantilism and restrictions generally was not aroused
by dearness of food. That aspect of the system came
into prominence from the end of the century as a result
of bad harvests, the impediments to importation created
by the war, and the efforts of the belligerents to destroy
each other's commerce ; as a distinct policy for benefit-
ing agriculture, protection dates from 181 5.

In the early periods of interference (from the four-
teenth to the end of the eighteenth century) the export
of corn had been checked with the idea of maintaining a
sufficiency at home, and restrictions on its sale were
made with a view of excluding the profit of middlemen
rather than with a protective aim. But under Charles
II. interference began in the interest of land-owners, and
import duties were imposed, which, however, had little
eff"ect on prices. After the Revolution a 5^. bounty was
given on the export of corn when the price fell to ^Ss. a
quarter. This was expected to raise prices, but in
reality it stimulated production, and led to inclosures
and wider cultivation of corn-land with the object of
gaining the bounty, though, as some maintain, at the

1 " Merchants and manufacturers are the people who derive the greatest
advantage from the monopoly of the home market. . . . Country gentle-
men and farmers are, to their great honour, of all people the least subject to
the wretched spirit of monopoly. The undertaker of a great manufactory is
sometimes alarmed if another work of the same kind is established within
twenty miles of him" {Wealth of Nations, book iv. chap. 2).

(M460) C

34 The Free-trade Movement.

expense of other branches of agriculture. Prices were
kept down, and as a fact corn was cheaper by some
30 per cent in the first half of the eighteenth century
than in the seventeenth, a circumstance which may in
some measure have been owing to the impulse given by
the new agriculture, though it was undoubtedly mainly
due to the bounty, which lowered prices by calling forth
an increased supply.

Though Adam Smith made a general attack upon \
restrictions on commerce, he admitted two important ]
exceptions which call for special notice: — (i) When the
tax which is placed upon an imported article is balanced
by an equivalent duty upon the home product, as in the
case of our present duties on spirits and beer; such
taxes, being levied purely for revenue purposes, are not
protective. (2) The second case is that of national
defence, which he maintained was **of much more /
importance than opulence", and his support of the
famous Navigation Laws rests upon this ground.^

The first Navigation Act was passed as early as 1381;
when an attempt was made, not very successfully, to
develop a navy by requiring merchants to employ
English shipping. The patriotic outburst of the Eliza-
bethan period, coinciding with a spirit of maritime
enterprise and great expansion of trade, did much more
to stimulate the formation of a navy. The Navigation
Acts of 1 65 1 and 1660, however, exercised great influ-
ence in developing England's maritime power, in that
they crushed the Dutch carrying trade. Their economic
aspect was twofold: on the one hand, they benefited
ship-owners and merchants by raising prices and rates ;
on the other, they irritated consumers and shippers (who
would either have employed the Dutch carriers or bene-
fited by their competition with the English), and they
offended the colonists by setting up monopolies in their

1 ' ' When the Act of Navigation was made, though England and Holland
were not actually at war, the most violent animosity subsisted between the
two nations. National animosity at that particular time aimed at the very
same object which the most deliberate wisdom would have recommended—
the diminution of the naval power of Holland, the only naval power which
could endanger the security of England " ( [Vealth of Nations, book iv.
chap. 2).

Adam Smith and Decline of Mercantilism. 35

trade. The justification of the Navigation Acts is\
political and not economic. Sir Josiah Child's defence
of these Acts,^ made in 1690, rests virtually upon the
same kind of argument that has been advanced for
strengthening the Navy for Imperial purposes during
the past few years. He observes: *'This kingdom
being an island, the defence whereof has always been
our shipping and seamen, it seems to me absolutely
necessary that profit and power ought jointly to be
considered, and if so, I think none can deny but the
Act of Navigation hath, and doth occasion building and
employing three times the number of ships and seamen
that otherwise we should do ; . . . many ships and
seamen being justly the reputed strength and safety of
England". In the absence of a formidable national
fleet and of regular parliamentary votes for the con-
struction and maintenance of ships of war, the Naviga-
tion Acts succeeded in providing the stimulus for the
creation of a mercantile fleet, which could then supple-
ment the national navy and off"er substantial defence for
the country in time of war. This is their justification.
On purely commercial grounds there is little to be said
for them ; 2 competition, coupled with the political events
which afterwards completed the misfortunes of Holland,
would most probably in time have given Great Britain
the first place among maritime nations, without the aid
of shipping regulations.

It will be seen that the Protection of this century
differs in many respects from that of the mercantilists.
As has been explained, the latter aimed at ** national
strength ", and the commercial restraints adopted in the
light of the economic ideas then prevailing were imposed
primarily as conducing to that end. Some of the errors
of that system had received their death-blow. The
revolt of the American colonies demonstrated the folly
of the ''colonial system" of trade. Adam Smith had
exposed the fallacies respecting money, which led to

'^Discourse upon Trade, by Sir Josiah Child (1690).

2 "The Act of Navigation is not favourable to foreign commerce, or to
the growth of that opulence which can arise from it" {Wealth of Amotions,
book iv. chap 2).

36 The Free-trade Movement.

regulations for securing a balance of the precious
metals ; the growth of a system of credit had introduced
a new method of meeting extraordinary expenditure by
loans, and dispensed with the necessity for accumulating
national treasure. The adoption of the principle of
** natural liberty", which aimed at increasing the
national wealth by encouraging individual wealth, de-
stroyed the policy which treated commerce merely as an
instrument for revenue. Also the original aim of the
Mercantilists had been partly attained; the nation was
becoming consolidated and powerful. Still, the elements
of a protective policy survived in established practices
and beliefs, and the circumstances of the close of the
eighteenth century were peculiarly favourable for reviv-
ing and strengthening them in the new form which is
the characteristic of nineteenth-century protection.

Some fallacies lingered on — that the gain of one coun-
try in trading involves an equivalent loss to the other;
that commerce is a species of warfare, and that to im-
port an article which can be produced at home is an
injury to the country which imports. These errors,
which are at the root of much Protectionist writing at
the present day, took their rise in less-settled times,
when national animosities and jealousies were easily and
frequently aroused, and mercantilism nourished their
growth. The struggle with France, that commenced
in 1793, during which France returned to strict prohi-
bition, and which dragged on until 18 15, was calculated
to deepen this doctrine; in fact it gained wide currency
at that period. Patriotism was supposed to demand the
exclusion of the goods of the hostile country, and to
require the nation to encourage its own industries.
National sentiment, aroused by threats of invasion,
supported the rather loose reasoning, that, as hostile
forces must be repelled, so it was equally meritorious to
repel " invasions of goods" from hostile countries. In
such circumstances it is not difficult to perceive how the
conflict of arms led on to a conflict in the commercial
arena, and how measures which made for national inde-
pendence and self-sufficiency became the popular policy ;
and the spirit of bitter antagonism to foreigners en-

Adam Smith and Decline of Mercantilism. 37

gendered a hatred and fear of dependence upon them
for food, with a strong- desire to support those home
industries which provided the national sustenance. A
third cause co-operated with these to favour the exclu-
sion of foreign goods; this was the serious need for
revenue for military purposes, which led to taxes being
levied upon every available object. The result of this
prohibitive policy was that highly-protective duties were
imposed upon foreign goods, and especially corn, during
a period sufficiently long to establish industries on a
protective basis, and to accustom the nation to the pro-
tective principle. Out of these various elements the
Protectionist policy of the early part of this century was
evolved.

Adam Smith's advocacy of ** natural liberty" has laid
him open to the charge of propounding an uncompro-
mising laissez-faire theory. As the philosophical leader
of a great reaction against excessive state regulation in
matters of trade, he has been made responsible by some
of the modern advocates of extended state control for
the views of those of his followers who, at a later period,
pushed the doctrine of non-interference to the extrava-
gant length of opposing factory legislation. The im-
putation, however, falls to the ground when we consider
the circumstances of the times in which he wrote and
the industrial conditions which then prevailed. He found
economic affairs regulated in every detail ; the task which
pressed was that of attacking and overthrowing hurtful
restrictions. To Adam Smith ** natural liberty" meant, \
economically speaking, the right to dispose of goods or V
labour free from unnecessary restraints and taxation./
The period called for destructive criticism, and he sup-
plied it, along with sound economic investigation.
Laissez-faire^ as generally understood now, never had
existed in England when he wrote ; it was not advocated
by Adam Smith, he simply attacked impediments to
freedom of commerce and labour, common in his day.
It was impossible for him to anticipate the evil of in-
dustrial conditions which arose in a new century of
mechanical invention, and the limitations which the
factory-system and methods of large production have

38 The Free-trade Movement.

since rendered necessary, in order that labourers may
enjoy the liberty of action which he claimed for them, by
the removal of disabilities derived from feudal ideas.

Laissez-faire is a doctrine which found favour in Eng-
land at a much later period, and it is much more a
political maxim than an economic doctrine. It was part
of the creed of the politicians of the Manchester School
(as they have been called), who made the attainment of
a peace-policy their leading aim, and advocated Free-
trade, the minimum of state intervention with business,
and non-interference with the affairs of other nations as
the chief means to that end : they represented the most
extreme and abnormal development of the non-interfer-
ence principle. But laissez-faire ^ unadulterated or un-
alloyed, is not a maxim adopted by economists, least of
all by Adam Smith. Ricardo and M'CuUoch, who hav^
been regarded as its chief upholders among economists^
admitted many exceptions to the principle; their suc-
cessors, J. S. Mill and Jevons, distinctly repudiated it as
an ideal, and indicated many directions in which it is
expedient for the state to intervene.

Adam Smith, writing while factory employment and
machine-industry were in their infancy, argued for greater
liberty in trade and industry, but his opinions must not
be identified with views that were propagated some fifty
years later. He exposed the errors of his own day, and
assailed definite abuses then existing and working great
injury and injustice to the majority of the people. His
individualism was a reaction against the extreme forms
of restriction from which the country had long been suf-
fering, and against the doctrine of state-control, which
was the fundamental idea in the moribund mercantilism
of his times. It is not surprising if in attacking con-
crete evils he propounded some principles which need
modification when applied to later circumstances, and to
later phases of industrial employment; but his doctrine
of Free-trade requires no such revision or re-adaptation,
— indeed the conditions of modern production make it
more than ever applicable — at least to Great Britain.
His belief in the beneficent working of enlightened self-
interest, and his conviction that the good of society

Tariff Reform.

39

would be best attained by the removal of impediments
to individual action, are extremely optimistic, and are
not to be taken absolutely, or as true for all circum-
stances. Experience shows that men are not all en-
lightened as to their real interects, nor are they equally
capable of pursuing those interests; natural and un-
avoidable differences in opportunity and ability render
many restraints necessary upon individual action, if the
strong are not to abuse their power and the weak to
suffer wrong. The scope of government action is very
wide in checking injustice and fraud, in limiting abuses
in the employment of power, in aiding and defending
those unable to compete fairly in the struggle for exist-
ence, and in helping the ignorant and weak to attain
knowledge and efficiency. But the character of the in-
terferences here indicated is quite in accordance with the
spirit of Adam Smith's teaching, and equally at variance
with the restrictions which he assailed. Both make for
greater freedom of action and opportunity. It was his
task to expose the errors of Protection, and of impedi-
ments to free labour and free commerce, and to demon-
strate the advantages that would accrue by removing
the fetters which interfered with the natural and bene-
ficial action of men ; it was for a later generation, in the
same spirit and with similar enlightened views, to build
up new walls against monopoly, and to impose restraints
upon fresh abuses, which experience has shown will arise
in every age.

Chapter III.
Tariff Reform {1785-1838).

Towards the end of the eighteenth century mercan-
tilism was declining and more liberal ideas were gaining
ground ; under the influence of sounder economic doctrine
there was a movement towards moderating restrictions
on trade. This is seen in the numerous treaties of com-
merce between European nations which were framed

4o The Free-trade Movement.

between 1780 and 1790. An attempt had been made in
17 1 3 to arrange a Treaty of Commerce with France, but
it was defeated by the jealousy of the English commercial
and manufacturing classes engaged in the silk, woollen,
and linen trades. After the Peace of Versailles (1783)
a better feeling arose, France showed a more liberal
spirit and a desire to come into closer trade relations ;
and overtures for a commercial treaty were begun by
Pitt. Both nations, however, distrusted one another;
their suspicions, together with the attempts to get the
better of one another, created difficulties in arriving at
any agreement on details. After three years of delays,
Mr. Eden, who was sent to Paris to represent Great
Britain, succeeded in negotiating a treaty, which con-
tinued in operation from 1786 until the outbreak of the
revolutionary war in 1793 once more roused bitter
animosities and renewed commercial hostilities. By the
terms of this treaty France undertook to reduce the
duties upon British cotton and woollen goods to 12 per
cent ad valorem^ and those upon hardware, cutlery,
and other goods to 10 per cent ad valorem (the duties
had previously been prohibitive); manufactured silks,
and goods composed of wool or cotton mixed with silk,
were still prohibited. Great Britain reduced the duties
on French wines, vinegar, brandy, and oil, on glass and
many other manufactures, to less than one-half. The
result was beneficial to both. Trade between the two
countries doubled in three years, smuggling declined,
and a more friendly feeling prevailed. France entered
into similar treaties with Holland and Russia, and the
liberalizing effect of the policy was seen in a moderate
general tariff drawn up by the Constituent Assembly in
1791.

William Pitt, who was much influenced by the writ-
ings of Adam Smith, had set himself to carry out a
policy of peace, retrenchment, and reform. He wished
to remodel the system of taxation, and advanced a stage
towards the adoption of Free-trade principles by reduc-
ing the duties on imports. He hoped thus to promote
commerce and to stimulate the national industry and
wealth, to increase the revenue, and put a check upon

Tariff Reform. 41

the contraband trade which was fostered by the system
of high customs duties. As an example of this illicit
trading, the duty on tea raised the price 120 per cent,
with the result that two-thirds of the tea consumed in
the country was smuggled. Pitt lowered the duty to
12^ per cent (1784). He endeavoured to strengthen
the finances of the nation by economy in administration
and improved methods of taxation. By consolidating
the customs (1787) and substituting one rate for the
various duties imposed on each article, he gained revenue
and reduced the cost of collection, while the public
benefited from the simplification and the reduction of
vexatious duties. Pitt also devised new taxes, and bor-
rowed some ideas on direct taxation from the Dutch.
He imposed a tax upon inhabited houses, and adopted
the succession duty; by reducing the taxes upon some
necessaries and increasing those upon personal property,
he made a very distinct movement from indirect to direct
taxation, and shifted part of the burden of taxation from
the poorer to the richer classes.

The outbreak of war, in 1793, defeated Pitt's cherished
hopes of financial reform, put an end to the commercial
treaty with France, and plunged the nations again into
commercial hostilities; it also created a demand for
fresh revenue to meet the increased expenditure. New
taxes had to be levied, old ones reimposed ; and it was
in the succeeding period of heavy taxation, extending
over more than twenty years, that the system of pro-
hibition and restrictions thus adopted developed the
modern protective principle of fostering home industries.
Each year, from 1793 to 1798, the customs and excise
duties were augmented; and in 1798 Pitt imposed an
income-tax of 10 per cent upon incomes of ;^2oo and
upwards, with a graduated scale for incomes down to
;^6o ; this tax was maintained until the close of the war.

The effects of the war were disastrous to British com-
merce and manufactures, and they were accentuated by
several years of bad crops (1793-95), ordinary industries
received a check, and an impulse was given to military
expenditure. Violent fluctuations in prices ensued, com-
mercial credit collapsed, followed by a crisis which

42 The Free-trade Movement.

produced depression and want of employment. The
scarcity of food is curiously illustrated by an agreement
made between members of both Houses of Parliament
in 1796 to reduce their household consumption of wheat
by one -third and to recommend the practice in their
several localities. At this time a bounty of 21s. per
quarter was being offered by the government on wheat
from the south of Europe and other distant parts.

France prohibited the importation of British produce,
Britain retaliated by checking the'entrance of food and
merchandise into France. Not content with assailing
one another's shipping, they interfered with the trading
in neutral vessels, and came into collision with other
nations. British commerce suffered ; yet with the United
States it doubled between 1793 and 1798, partly owing
to the export of cotton from the States, which com-
menced in 1794, and stimulated the Lancashire trade.
The Peace of Amiens (1802) gave a short suspension of
hostilities, but the war was resumed in 1803 with greater
vigour and determination, and more strenuous attempts
by both parties to ruin one another's commerce. Great
Britain sought to cut off the trade between France and
the colonies carried on under neutral flags, France
endeavoured to exclude British goods from the Continent.
The decrees of Napoleon (1806-7) ^^^ the British Orders
in Council pushed the warfare upon supplies and com-
merce to a degree hitherto unknown. Each country
sought to cripple the other in resources by the destruc-
tion of its commerce. Napoleon ordered British mer-
chandise on the Continent to be seized and burned, and
employed his troops in its destruction. A clandestine
trade meanwhile was carried on by smuggling, and by
a system of evasions, at which both parties connived.
At home trade was in a miserable condition, employ-
ment was scarce, wages low, food expensive, and
suffering frequent. The war, though ineffectual in
wholly stopping trade, was successful in producing
great misery.

The vast expenditure of the war in the early period had
called forth the ingenuity of Pitt to provide resources.
From the position of a financial reformer he was driven

Tariff Reform.

43

to that of a war minister. The outlay was met by two
methods: (i) the extension of the system of public bor-
rowing, which built up a huge national debt; and (2) by
a large increase of taxation, both direct and indirect.
Duties were placed upon almost every article of con-
sumption, both of home production and foreign, — food,
raw materials, and manufactured goods alike. At the
close of the war (181 5) the nation found itself with
a debt of ;£"86o,ooo,ooo, and taxation (which was
;£"i 7,000,000 before the war) amounting to ;£"72,ooo,ooo,^
for a population numbering less than 20 millions. Mili-
tary expenditure had averaged ;£"36,ooo,ooo over the 23
years of war, and increased from ;^4, 250,000 in 1791
to ;^6o, 250,000 in 1814. Between ;£'5o,ooo,ooo and
;£'6o,ooo,ooo was paid in subsidies to continental allies.
Corn imported in years of scarcity during the war
(1796, 1800, 1 80 1, 1802, 1805, 1 810) was estimated at
more than ;^2 5, 000,000.2 Rent of land had risen nearly
threefold during the war, and the prices of all consum-
able goods were high.

It was hoped that with peace would come prosperity,
but the country was exhausted by the war, and its cessa-
tion even caused some temporary want of employment.
There was great distress among both the manufacturing

1 Table comparing Public Revenue for four periods in ;^s (omitting 0,000).
(First 3 cols, from Newmarch, Statistical Journal.)

Year

Year

Year

Year

1815.

1825.

1852.

1896.

I

£,

I

£

Customs,

10.53

i6,S5

20,56

20,76

Excise

26,54

21,00

14.84

26,80

Assessed Taxes and Land and House Duty,

6.34

S.oo

3.37

2.50

Income and Property Tax, ...

15,28

5.52

16,10

Stamps and Death Duties,

6.37

7.45

6.76

18.95

Post Office

1,62

1,60

1,02

11,38

Telegraphs,

—

—

—

2,84

Miscellaneous,

52

46

1.14

2,64

Ireland (separate for 1815)

4.70

—

71,90

52,06

53.21

101,97

*The Present State of England, Joseph Lowe, 1823.

44 The Free-trade Movement.

and agricultural classes. No measures were advanced
to mitigate the burden of taxation upon the poorer
classes, but the House of Commons insisted, in 1816,
upon the abolition of the income-tax (as being a war
tax), though the ministry, under Lord Liverpool, wished
j to reduce it only one-half. The same parliament, com-
i posed largely of land-owners, had already passed a bill
; (181 5) which had for its object to maintain the price of
corn and keep up rents, while it aimed also at keeping
the land under cultivation and providing a sufficient
supply of home-grown corn. This law practically pro-
hibited the importation of foreign corn. The Baltic
Provinces and the United States were quite capable of
sending a plentiful supply, and were willing to take our
manufactures in exchange, but they were prohibited
from doing so. The Navigation Acts also seriously
hampered trade ; though some relaxation had been made
in 1796 in the case of the United States, and a further
relaxation was effected by the commercial treaty of
181 5, yet no general modification was adopted until
1822.1

The period of distress which followed the war per-
plexed the populace, who could not understand its causes;
and it was succeeded by many similar periods during the
next thirty years. Various causes contributed to the
depression ; foremost amongst them, the enormous war
expenditure which had drained the country and produced
a system of taxation pressing upon almost every item
of household expenditure; the restraints upon commerce
checked the manufacturing industries, imposed high
duties on materials, and excluded the corn which would
at the same time have fed the people and stimulated
trade; a demoralizing system of poor-law administra-
tion prevailed which was amended only in 1834, ^"^
there were several series of bad harvests and some
periods of speculation, followed by commercial crises in
I 1825 and 1839, which further disordered trade. The
poorer classes suffered great hardships from want ot
employment, low wages, and dear food. Riots broke

^ Stephen Dowell {History of Taxation^ vol. ii. pp. 248-250) gives the
summary of taxation for the year 181 5 as follows: —

Tariff Reform.

45

out in 1816, and bread shops were plundered. In the
Eastern counties the military were required to repress
the disturbances. Incendiarism became frequent, and
corn stacks were often destroyed by famishing- men.^
There was a revival in the Midlands of the attacks on

25,438,259

GREAT BRITAIN.

£
Direct Taxes—

Land Tax, ... ... 1,196,000

House and Assessed Tax, 6,500,000

Property and Income, ... ... 14,600,000

Legacy and Succession, 1,297,000

Insurance, Auctions, Licenses, Loco-
motion and Shipping, 1,845,259

On Consumption—

Eatables.

Salt, Sugar, Currants, &c., ... 5,115,663

Drinks.

Beer, Malt, Hops, 9,596,346

Wine, Spirits, &c., 8,600,772

Tea, Coffee, 3,868,050

Tobacco,

Raw Materials.

Timber, Coal, Stone, Cotton, Silk, Hemp, &c.,
Manufactures.

Leather, Soap, Bricks, Candles, Paper, &c.,
Stamp Duties,

Bills, Receipts, &c.,

Total, Great Britain, ...

IRELAND.
Excise, Customs, Stamps, &c.,

Total, United Kingdom,

27,180,831
2,025,663

6,062,214

4,080,721

2,743,000

67,530,688

6,258,723
73,789,411

1 " In 1816, at Bideford the mob interfered to prevent the export of a cargo
of potatoes ; at Bridport the mob paraded the streets, broke into the bakers'
shops, and proceeded to other acts of violence. Strong able-bodied men in
Essex were often only able to earn but 6d. a day, and wheat was at from £^
to ;^5 a quarter. Farm buildings, barns, stacks, machinery, business pre-
mises were set on fire, and all agricultural property seemed insecure and
liable to destruction by incendiaries. At Swanage six people out of every
seven were paupers, and the poor-rate amounted to 21J. in the ;^. ... In
Stafford the manufacturing poor were reduced literally to starvation. Men
were compelled to eat the cabbage stalks in their cottage gardens . . . and
27,500 persons out of a population of 84,000 were in receipt of relief in
Birmingham." — (Spencer Walpole: History, vol. i. chap, v.)

46 The Free-trade Movement.

machinery. In some places political demonstrations led
to disorder and pillaging" of shops. The distress gave
rise in some parts to agitation for parliamentary reform.
The farming classes were not exempt from suffering,
and many farmers who had broken up land for corn
when rents were high, and the price of wheat loos. a
quarter, found themselves threatened with ruin in the
periods of lower prices and depression which ensued
upon the advent of peace.

The first public movement against the system of
Protection was made in 1820, at a time when not only
corn but nearly every article of manufacture was pro-
* tected. It came from the merchants of London, who
presented a memorial (drawn up by Thomas Tooke,
author of The History of Prices) to the House of Com-
mons, complaining of the ** impolicy and injustice of
the restriction system", asking for freedom of trade
except as regards revenue, and adopting definitely the
position and arguments of Adam Smith. The Edinburgh
Chamber of Commerce sent in an equally forcible peti-
tion, urging the same enlightened views on trade. Lord
Liverpool's reply was ** that the difficulty of the reform
of taxation was in the vested interests which had grown
up and which would be imperilled if any attempt were
made at such a design ". The House of Commons re-
ported favourably upon the proposals set forth in the
petitions. The years 1823-1825 were comparatively
prosperous. Huskisson, who was President of the Board
of Trade, then commenced a series of financial reforms
extending over four years, and reducing the tariff"-
restrictions upon most foreign manufactures. He also
succeeded in modifying the Navigation Acts,^ both as

/ 1 The Act of Navigation (1651), which originated in political and com-
( mercial jealousy of the Dutch, declared: (i) that no goods or commodities ,
whatever of the growth, produce, or manufacture of Asia, Africa, or
America should be imported into England or Ireland or any of the planta-
tions, except directly in ships belonging to English subjects, and of which
the master and greater number of the crew were Englishmen. (2) That no
goods of the growth, produce, or manufacture of any country in Europe
should be imported into Great Britain, except in British ships or in such J
ships as were the real property of the people of the country or place in /
which the goods were produced, or from which they could only be, or/
mostly ware, exported.

Tariff Reform.

47

they affected the Colonies and foreign countries, and he
paved the way for the ultimate abolition of those re-
straints on shipping- by passing a measure ** to place the
shipping of any foreign state in the ports of the United
Kingdom, on a footing of equality with our shipping,
provided such states would afford reciprocal privileges
in their ports to the shipping of the United Kingdom ".

Huskisson endeavoured to modify the duties on the
import of raw materials, and he succeeded in lowering
many ; he also aimed at a tariff on manufactured imports
which should not exceed 30 per cent ad valorem^ The
duty on wool was reduced from 6^. to \d. per lb., and
its export (hitherto prohibited) was permitted; the im-
port duty on raw silk was reduced from \d. to \d, per
lb., that on thrown silk from 145-. 8^. to 5^. per lb., and
manufactured silk, previously prohibited, was admitted
at a duty of 30 per cent.

The silk trade, carried on in Spitalfields, Coventry,
and the eastern counties, had enjoyed a monopoly for
sixty years, yet the weavers were in a miserable condi-
tion, and often engaged in riots, and French silks were
smuggled very plentifully into the country. The in-
dustry was declining, there was no improvement in its
methods: manufacturers complained that an export
trade might be created by the help of a drawback equal
to the duty on the imported materials. In proposing
the reduction of the duty on silk, Huskisson thus states
his opinions on the effects of Protection: '*We are far
behind other nations in this industry, it (Protection) has
a chilling and benumbing effect, men are rendered in-
different to exertion by the indolent security of a pro-
hibitory system ".

1 Leading Modifications of Import Duties between 1823 and 1825.

Silk manufactures prohibition, altered to 30 and 25 jwr cent.

Cotton „ varying from 50 to 75 per cent, „ 10 ,,

Linen „ varying from 50 to 180 per cent, „ 25 ,,

Paper „ prohibition, „ same as excise.

Woollen ,, so per cent, ,, 15 per cent.

Leather, 75 per cent, „ 30 ,,

Iron bar, ^6J^ per ton, ,, Aijiperton.

Earthenware, 75 per cent „ 15 per cent.

Olive-oil, AiS, 15J. 7^. per ton, .. „ ;^4,4J.porton.

Flax, 5</. per cwt, „ \d. per cwt.

Glass bottles, 8j. per dozen, ,, 4*. per dozen.

^ OF xr

48 The Free-trade Movement.

Huskisson advanced the cause of free commerce, and
removed an injustice to Ireland, by abolishing in 1823 the
remaining- duties upon her trade with Great Britain, a
measure attempted by Pitt in 1785, but then defeated,
and not completed at the time of the Union from defer-
ence to English interests. He also simplified the admin-
istration of the customs and the complicated statutes by
which they were regulated.^ His course of enlightened
reform was unfortunately checked in 1827 by the death
of Lord Liverpool, and the break-up of the ministry. It
was, however, highly satisfactory in its results; con-
sumption increased, trade and revenue improved, and
the principle, already proved by Pitt's budget of 1784,
was established, that a reduction of duties, by adding to
prosperity and commerce, can become a means of yield-
ing greater revenue.

These reforms had been very tentative and cautious,
but were a distinct advance on the lines of free-trading.
A beginning had been made. They did not, however,
touch the stronger interests; the duties on corn and
agricultural produce, which were almost prohibitive,
remained, 2 while sugar and timber were also heavily
burdened by highly differential or prohibitive duties.

When the Whigs again resumed office, in 1830, an
attempt to continue the reforms in taxation was made
by Lord Althorpe. His object was to give relief to the
lower classes, and by removing duties which interfered
with manufactures to find them employment. In the
budget of 1 83 1 he proposed considerable reductions on
manufactured goods, but his scheme was not accepted,
and he did not accomplish much. Public interest was
now becoming absorbed in the question of political
reform. The Reform Bill was passed at length in 1832,
and many manufacturing towns, for the first time, re-
ceived representation in Parliament, and the power of
the middle classes was increased. For some years other
problems engrossed Parliament. The Poor Law Reform

^ When Huskisson commenced his reforms, about 1500 Acts of Parliament
regulated the administration of the customs regarding entry, export, and
custody of goods ; he reduced these Acts to 11.

2 The duty on butter was 21J. per cwt., on bacon 28^., on cheese lu.,
lard Bs., on potatoes 2s, per cwt., salt i$s. per bushel.

Tariff Reform. 49

(1834), Abolition of West Indian Slavery (1833), Muni-
cipal Reform (1835), and Tithe Commutation (1836) were
among the useful measures passed ; the monopoly of the
East India Company was extinguished in 1833, and
Post Office reforms were carried in 1839 which effected
a saving on communication equivalent to a reduction of
taxation.

Meanwhile, in 1830, an important contribution was
made to the subject of taxation by Sir H. Parnell, who
published an analysis of the revenue of 1829, and criti-
cised the system of duties in a work on Financial
Reform. He showed that taxes on materials were a
i loss to industry and to the employment of capital and
labour, that export duties on machinery were an injury
to industry and the export trade, and that excessive
duties diminished revenue by checking imports and en-
couraging contraband trade; this irregular mode of
importation had become so general as scarcely to be
deemed a serious offence; half the foreign goods con-
sumed were smuggled, and the illicit trading caused a
large expenditure to the country on officers for preven-
tion. So bold and open was this contraband trade that
smugglers even issued circulars stating the rates they
charged for goods by the ** indirect channel". Peel
read such a circular in the House of Commons (when
advocating his reforms in 1842), in which lace, gloves,
and other French goods were offered to a London
firm at rates "considerably below your custom-house
duties".

Sir H. Parnell recommended an income-tax on all
property and incomes, and pointed to the results of
Huskisson's reforms as demonstrating the gains from
reduction of taxes on imports. His arguments, which,
like Huskisson's, were derived from Adam Smith, had
great weight with Sir Robert Peel, who came into office
in 1 84 1, and at once entered upon a course of financial
reform. In each year from 1837 to 1842 the national
balance-sheet had shown a deficit: in 1842 it amounted
to two millions, a result for which bad harvests, the
speculation and rash trading fostered by the new joint-
stock system of banking which ended in the crisis of

(H460) D

50 The Free-trade Movement.

1839, together with the defects of the revenue system,
were jointly responsible.

A Parliamentary Committee in 1840, on Import Duties,
emphasized the facts set forth by Sir H. Parnell. It
exposed the absurdity and wastefulness of the existing-
customs system in no ambiguous manner. The tariff
oppressed every class, but especially the wage-receivers,
to whom an extension of commerce meant employment
as well as cheap food. Taxes, levied at about 11 50
different rates on all articles and on no common prin-
ciple, realized ;^23, 000,000; of this sum ;£'2o,ooo,ooo was
raised on 10 articles only, ;^i, 000,000 on 8 other articles,
while all the remainder produced less than ;£"!, 000,000,
some yielding only a few shillings; many duties were
entirely prohibitive and imposed a heavy burden on the
consumer in high prices while they yielded nothing to
revenue. The duties on food alone were estimated to
inflict a loss equal in amount to the whole of the revenue
derived from other articles ; the system of custom-house
administration was expensive and irritating.

In 1842 Peel brought in his budget for financial reform,
and, in imitation of Pitt, he provided the means for the
proposed remission of duties by an income-tax of 7^. in
the £f to be levied on incomes of ;^ 150 and upwards for
five years, during which period he anticipated that the
revenue would overtake the deficiency. His principle
was, to reduce the cost of living, to remove all prohibi- \,
tive and reduce all protective duties ; to reduce taxes on /
raw materials to a nominal amount or abolish them
altogether; to lower the rates on partly-manufactured
goods, which were really materials of manufacture, and
to reduce those on manufactures to a moderate and
nearly uniform rate of about 20 per cent. He carried
his measure, abolishing and reducing duties on 750
articles; but he deliberately left wine and brandy "as
instruments of negotiation with a view of effecting a
reduction in the duties imposed by other countries on
the produce of our country". Peel had previously in-
troduced his new sliding-scale^ for corn, and did not on

» The sliding-scale system of duties was adopted in France in 1819, and
was copied by other countries. It was a scheme by which the duty was

Tariff Reform,

51

this occasion deal with the corn duties, the Navigation
Act monopolies, or the duties on sugar. As a cautious
reformer, he preferred to remove first the duties which
which were obviously wasteful and vexatious, and to
establish the principle and prove its success before pro-
ceeding to those cases in which vested interests would
offer strong opposition. So far, though very sweeping,
his measures were tentative, and calculated to show the
advantage of reduction, and to educate the people to a
further application of the principle.

Peel, however, moved too slowly for the Anti-Corn-
law League, and his long resistance to their urgent
appeals caused him to be generally treated as an opponent
of Free-trade until the final stage of that agitation was
reached. Yet Peel's finance, from 1841, was entirely in
sympathy with Free-trade principles, and his reforms
were steps towards a more complete adoption of that
policy. As a statesman he knew the difficulties of prac-
tical politics; though he moved slowly he was progress-
ing surely towards the goal from which, as he explained
later, he knew there was no return.^ In the domain of
practice many considerations arise, and it is what is
possible, not what the desire for strict application of
principle would dictate, that has to be adopted. Though
leader of the Conservative party. Peel was careful
at no time to pledge himself to the maintenance of a
protective policy. He clearly defined his own position
with regard to the Corn-laws in his speech in the debate
on Mr. Villiers's annual motion in 1839, when he said:
'* Unless the existence of the Corn-law can be shown to
be consistent not only with the prosperity of agriculture
and the maintenance of the landlords' interest, but also
with the protection and maintenance of the general in-
terests of the country, and especially with the improve-
ment of the condition of the labouring class, the Corn-
regulated automatically to different circumstances. Peel started with a
duty of 20s. a quarter on wheat when the average price was 50J. a quarter.
As the price rose is. a quarter the duty fell u. a quarter (with a few excep-
tions) until at 73J. and upwards it remained at is. a quarter.

^ "But who will re-establish the Corn-laws once abrogated, though from a
casual and temporary pressure. "—Letter of Sir R. Peel to Lord Heytesbury.
{Memoirs of Sir R. Peel, vol. ii. *

52 The Free-trade Movement.

law is practically at an end". And again in 1842: "I
should not consider myself a friend to the agriculturist if
I asked for a protective duty with a view of propping up
rents, or for the purpose of defending his interest or the
interest of any particular class ". And in his Memoirs
he writes: ** During the discussion in Parliament on the
Corn-law of 1842, I was more than once pressed to give
a guarantee (so far as a minister could give it) that the
amount of protection established by that law should be
permanently adhered to; but although I did not then
contemplate the necessity for further changes, I uniformly
refused to fetter the discretion of the Government by
any such assurances as those that were required from
me .

Peel's part in the repeal of the Corn-laws is reserved
for later discussion; here we continue the brief record
of his financial reforms. In 1845 he could point to the
success of the measures he had introduced, and he then
succeeded in obtaining a continuation Of the income-tax
for three years in order that he might extend his system
of reform. He was thus enabled to further simplify the
customs, and to remove 450 duties entirely from the tariff,
many of them on raw materials of industries, such as
cotton, silk, hemp, flax, hides, &c. Duties on exports
were finally abolished; import duties on manufactured
articles of cotton, wool, linen, leather, and metals were
reduced ; the differential duties on sugar (which varied
with the country of origin) were cut down. The latter
measures encountered opposition from those who wished
to retain some duties for the purpose of negotiating
commercial treaties. The remaining alterations in the
tariff, completing the Free-trade policy, and reducing
the British tariff to one for revenue only, were carried
out subsequently by Mr. Gladstone, who, as President of
the Board of Trade, had shared very fully the labour
involved in the details connected with Peel's remissions
of duty.

Before entering upon the history of the agitation
against the Corn-laws, it may be well to notice the
general character of the previous interference by govern-
ment with the import and export of corn. The great

Tariff Reform. 53

stniggfle for freedom of trade finally took place upon this
interest, and the corn duty is commonly regarded as the
central problem of Free-trading, both on account of the
severity of that struggle, and because of the extreme
importance to this country that attaches to an adequate
supply of imported food ; but the principle of free im-
portation has almost equal significance for all imported
articles which form the materials of British industry. It
was mainly to the freeing of these, and to the sim-
plification of our customs system, that Sir Robert Peel
devoted his efforts for some years before the climax of
the Corn-law repeal was reached ; the enormous strides
that he made in this direction entitle him to the credit of
having accomplished the second considerable stage in
the Free-trade movement of this century.

The corn-trade was subjected to legislative interfer-
ence lor many centuries. Regulation may be said to
have taken three <^\sXAnct forms: the first wa.s prohibition
of export, dating from 1360, while free importation was
allowed; up to 1793 regulation was mainly directed to
export, although importation also came under control.
Following the French war, stringent Corn-laws were
imposed in 181 5, which checked free importation to
encourage the growth of home supplies. Neither policy
succeeded, for in both cases there were great irregulari-
ties in supply, and great and sudden variations in price.
Finally, in 1846, the policy of interference was reversed,
and freedom of trading was substituted, with no regula-
tion of either importing or exporting beyond a registra-
tion duty of i^. a quarter on wheat, which was removed
in 1869.,

Legislation during these six centuries was frequent
and variable, a fact which demonstrated that each fresh
attempt at regulation was a failure, as it had to be
superseded by another. The Act of 1360 was relaxed in
1394 to permit exportation to friendly states. In 1436 a
limit was placed upon this privilege; in 1463 importa-
tion was prohibited until wheat reached 6^. Sd. a quarter.
In 1534 exportation of grain was forbidden, except for
victualling the English possessions of Calais and Guienne,
on the ground that scarcity and high prices ensued at

54 The Free-trade Movement.

home. This policy also failed to encourage corn-grow-
ing in England, for under Edward VI. it was enacted
that as much land should be tilled in every parish as had
been under the plough since the accession of Henry
VIII., and a penalty was imposed for any failure.

In 1554 exportation was again allowed up to the
6s. 8d, limit, the law against it having proved futile;
after eight years the limit of price was raised to lay.;
under Elizabeth and the Stuarts various modifications
were made; in 1670 exportation was checked at 53^. 4^.
per quarter, and importation was forbidden until that
price was reached, which was practically prohibitive.
The idea of the necessity for a steady high price in the
interests of agriculture had gained ground, and this idea
prevailed until the abolition of the Corn-laws. In 1689
the landlords secured a bounty of 5^. per quarter on the
export of wheat when it did not exceed 48^. , and propor-
tionate bounties on barley and other grain.

From 1697 to 1765 the average export of corn was
500,000 quarters, a large part of which went to Holland.
During this period the imports of grain were small. By
the Act of 1773 the bounty on exported wheat was
altered to begin only when the price fell to 44^. per
quarter, and importation was legal with a duty of only
6d. a quarter when the price of wheat was not less
than 48^.

This was the most liberal scale during the whole his-
tory of the corn restriction, and it was obtained largely
by the advocacy of Burke, who pointed out that the
landed interest was not distinct from the trading interest,
and that *'he who separates the interest of the consumer
from the interest of the grower starves the country".

The limit of import was raised to 54?. in 1791 on the
plea that the nation might otherwise become dependent
upon foreign countries for food. In 1804 a further change
was made in favour of high prices; the lower limit of
importation, with a duty of 24^. 3^^., was raised to 63^.
per quarter ; between 635. and 66^. the duty was 2s, 6d. ,
and above 66^-. it was 6d. per quarter.

For nearly a century prior to 1773 the exportation
of corn had been stimulated by the aid of bounties;

Tariff Reform. 55

between 1773 and 1793 little corn was either exported or
imported; from 1793 exporting ceased, and succeeding
legislation was directed to checking or regulating im-
portation. Towards the end of the century circum-
stances were altering; new industries had followed on a
period of invention ; a town population was growing up,
and the cotton, iron, and coal trades were developing:
Great Britain was becoming a manufacturing country
and an exporter of cotton goods. During the first
twenty years of the nineteenth century wheat averaged
98^. a quarter. Violent fluctuations in prices occurred
during the whole of the war with France. An excep-
tional number of bad seasons made scarcity at intervals,
the war created difficulties in obtaining foreign supplies,
taxation was extremely heavy, trade was dislocated and
uncertain, the poor-law added to the misery by its mis-
taken methods, irregularity in employment and violent
changes in price created much distress among all classes
dependent upon industry. The rise in prices was further
increased by the scarcity of labour, as men were with-
drawn from agriculture tor military service; and during
the last five years of the war prices were further raised
by the depreciation of the paper currency. The enor-
mous expense of the war and the payment of subsidies
(some ;^6o,ooo,ooo) to Continental allies created a
scarcity of money, which led to the suspension of cash
payments by the Bank of England in 1797, and, after a
time, to the over-issue and depreciation of the bank-note.
This inflation of the paper currency raised gold to a
premium of 20 per cent in 1810, and it increased to
29 per cent by 181 3. The influence of the inflation upon
prices was considerable, though it seems not to have
been understood at the time; every variation increased
fluctuation ; the disturbance was most injurious to com-
merce, and a source of loss to ordinary consumers.
/ Owing to the high price of corn which prevailed
during the wars, the operation of the Corn-law was
slight. Commerce was impeded by the wars, but the
deficient harvest of 1809, which raised the price of wheat
to ;^5 and £6 per quarter, led to an importation in
1810 of ;^7, 000,000 worth. During the succeeding

56 The Free-trade Movement.

^ years, when the edicts of Napoleon and the Orders in
Council were in force, importation was checked, and the
price of wheat in 1812 and 181 3 averaged ;^6 per
quarter.

In 1814, with the prospect of peace, the price of corn
fell considerably, and an attempt was made to raise the
duties on importation; the agitation and resistance
aroused in the country prevented the measure from
passing the House of Commons. But in the following-
year, notwithstanding many petitions and much opposi-
tion, an Act was passed by which corn was excluded
until the average price was 80s. per quarter for wheat,
40^. for barley, and 26s. for oats. To the British colonies
(which, however, sent little corn) the limits of price were
675., 32^., and 22^. The measure, thus hurried through
Parliament, led to disturbances, and riots took place in
London.

It is interesting to note that a protest against the
Corn-law of 181 5 was drawn up in the House of Lords
by Lord Grenville, and signed by ten Peers, on the
ground that it was a restraint on commerce and an
artificial and injurious restriction, adverse to the pros-
perity of the nation, and more peculiarly so in the case
of that commodity on which depends the existence of a
large portion of the community; that the expectations
from it were delusive, as it would not contribute to pro-
duce plenty, cheapness, or steadiness of price; that, in
any case, it would entail a great present evil, giving a
bounty to the grower of corn by a tax levied upon the
consumer; and that Parliament was wholly uninformed
of the causes of public distress.

The seasons of 1816 and 1817 were unfavourable and
the crops deficient; wheat rose to an average of g6s. iid.
in 1817, and even reached 112^. Sd. Importation took
place at these times, but great privation had arisen
before the imports were in any degree proportionate to
the demand.^ Under a system which was prohibitive in
ordinary years, there could be no regular foreign supply
or organized trade in corn, and it was only after the

*Com was imported in 1817, 1818, 1819, at a cost of ;^2,ooo,ooo (Lowe,
State <tf England).

Tariff Reform. 57

, scarcity-price had been reached and suffering had be-
\ come very severe that supplies came in adequately. The
■ imports became most abundant when the period of
dearth was coming- to an end, so that they coincided
with the increased home-supplies of the good years, and
forced down prices. The periods of scarcity starved the
labourers with high prices, and years of plenty ruined
the farmers with low prices.

The fears expressed in the petition of the Peers were
amply fulfilled. Rents, which had been lowered after
the fall in prices in 18 14, again rose, and prices fluctu-
ated; in good years the crops realized less than half
I that which they produced in bad years. Steady high
i prices had been expected as the result of legislation,
but they were never attained. It might have been fore-
seen that by restricting the supply to the limited area of
the country, prices must fluctuate with every variation in
the seasons. From 1820 to 1822 there were no less than
475 petitions to the House of Commons complaining of
the distress and of the exhaustion of agricultural capital,
of high rents and rates, and of the poverty of the
farmers, whose rents had been based on the assumption
of the higher prices to be secured under the Corn-laws.

Before a Committee of Inquiry of the Lords and
Commons (1821-1822) abundant evidence was produced
to show that the act had not realized what its promoters
had declared, high rents alone excepted, as these had
been based upon anticipated high prices. It was stated
that the tenants were paying charges and outgoings
f from capital and not from profits ; and that prices were
' ruinously low in spite of Protection, which at that time
amounted to monopoly, since, with one exception for
oats, the ports had been closed against all foreign im-
ports for nearly thirty months. Even some land-owners
complained that the act was detrimental, because it led
to diminished consumption of food. Statistics were pro-
duced from some of the large towns — Birmingham,
Leeds, Sheffield, — which showed a greatly decreased
consumption of meat; while prices fell, the demand
diminished still more, for the paralysis of trade caused
by the system of Protection had reduced the employment

58 The Free-trade Movement.

of those who lived by manufactures for export, and their
consumption of food was necessarily cut down in the
same degree. Multitudes were thrown upon the poor-
rates, which, being augmented in towns, spread the bur-
den more widely. Between 18 14 and 1820 poor-rates
doubled in many parishes. The vicious poor-law system,
which gave relief in kind or money in proportion to the
price of bread, aggravated the evil. The Report of the
Select Committee of 182 1 left no doubt as to the fact of
the distress which had overtaken the farmers, and had
involved the shopkeeping and other classes. They sug-
gested no remedies, but their faith in Protection was
shaken, and they expressed *' a doubt whether the only
solid foundation of the flourishing state of agriculture
is not laid in abstaining as much as possible from inter-
ference either by Protection or Prohibition with the appli-
cation of capital in any branch of industry ".

As a result of the inquiry a small modification of the
Corn-law was made in 1823 by Lord Liverpool, and the
limit of exclusion was reduced from Say. to 70^. for the
importation of wheat, with similar reductions for other
kinds of grain. As prices did not again rise to this level
during the six years the law was in force, the Act was a
dead letter, it gave no relief. Fluctuations continued
as before. In 1829 further legislation took place; the
government of the Duke of Wellington, of which Pitt
and Huskisson were members, introduced a new sliding
scale based on 64^. as the standard. At 64^. a quarter,
a duty of 23^. Sd. was imposed, and the scale was gradu-
ated so that at 73^. the duty was only i^. per quarter.
This was the scale in operation when the agitation for
repeal was commenced.

No good results accrued from these manipulations of
the tariff. Prices fluctuated as before with the seasons,
averaging 61^. 8d. for the five years 1829-1833. The
distress among farmers increased to such a degree that
a further parliamentary committee was appointed in
1833 to inquire into the state of agriculture. The evi-
dence was most conclusive as to the reality of the farmers'
complaints and their inability to meet outgoings ^oni
current prices. " Rates had increased, especially poor-

Tariff Reform. 59

.rates, rents had not fallen with prices, and the savings
jof many were gone, their credit failing, and their re-
,^ sources generally exhausted." Numbers of farmers had
j been ruined, and their capital was so reduced that the
I system of farming had retrograded, and land was going
I out of cultivation. Labourers were in like distress, and
had resorted to rioting and incendiarism.

The following copy of a petition to the House of
Commons from agriculturalists in Somerset (one of
many sent in) describes the condition of that class under
the operation of a law designed to foster agriculture :

' * We, the gentry, magistrates, clergy, freeholders, and
occupiers of land in the district of the once opulent Vale
of Taunton most humbly represent to your honourable
House that the cruel distress throughout the district in
which we reside has arrived at an unparalleled height
and is daily increasing to an alarming extent with a
progressive decline in the value of all productions of the
earth, accompanied by an overwhelming burden of taxa-
tion such as was never endured by any country, and has
swallowed up the capital of the farmer, and brought the
greater proportion of independent yeomen to the brink
of ruin which without the most speedy relief must ter-
minate in the annihilation of this most excellent and
Invaluable body of men ".

The chief foreign supplies of corn at this time came
from Russia and Poland, and a small quantity from the
North American colonies. The highest amount of wheat
imported in any year was 1,701,885 quarters (in 1830)
when the price was 64^. 3^., in some years none at all
was admitted; the average from the beginning of the
century to the formation of the League in 1837 was
about 500,000 quarters.

Events demonstrated that tariff legislation could not
/f determine prices, and that contracts based on any
/assumption of a regulation rate were delusive. The
depression in agriculture affected other industries; first
traders, then producers suffered, until the distress be-
came general. The Committee of 1833, after an elabo-
rate exammation, conclude their report with the opinion
"that hopes of amelioration in the condition of the

6o The Free-trade Movement.

landed interest rest rather on the cautious forbearance
than on the active interposition of Parliament". Nothing
was done by Parliament upon this report, and three years
later (1836) the continued distress led to a further par-
liamentary inquiry. The evidence is of the same nature
— ** prices were such that farmers could not recover ex-
penses and rent", they declared the Corn-laws a delusion,
since they were expected to keep up prices and had not
done it. Further help of some kind they wanted from
the state, something which would keep prices up to such
a level as to give them an assured profit. Here and
there in the evidence we find the opinion that freedom
and the prosperity of other trades would create a de-
mand for farming produce, and that in this direction,
with reduced rents, would prosperity for farming alone
be guaranteed. The Committee of 1836 did not agree
upon any report.

A bad harvest in 1836 raised the price of corn; this
was followed by a commercial disaster which led to
serious failures among the trading firms in the north of
England, and produced great distress among the labour-
ing classes, who suffered simultaneously from loss of
employment and a rise in the price of food. An attempt
was made to obtain some alleviation by a bill to substi-
tute a fixed duty of lay. per quarter on wheat for the
sliding-scale. It was supported by 89 members, includ-
ing 10 members of the Government, but was defeated by
a majority of 134.

The death of William IV. and the accession of Queen
Victoria introduced a new era. Lord Melbourne returned
to office, and during the year 1838 was mainly engaged
with the Canadian rebellion, the settlement of which
took place in 1840.

The further history of the movement for the repeal of
the Corn-laws is identified with the doings of the Anti-
Corn-law Association and League.

Agitation for Repeal of Corn-laws, 6i

Chapter IV.

The Agitation for the Repeal of the Corn-laws
(1838-1846).

It was the Reform Act of 1832 which rendered the^
repeal of the Corn-laws possible. From 181 5 to 1832 at
every great public meeting for reform the Corn-laws were
denounced, and thus the agitation for reform came to
be regarded as a step towards cheap bread. At the
memorable meeting in Manchester in 1819, which led to
the Peterloo Massacre, the banners proclaimed both
** No Corn-laws " and " Universal Suffrage ".^ Thus in
the minds of the common people the two demands
became more or less identified.

A resolution against the Corn-laws was moved in the
House of Commons in the year 1826 by Mr. Joseph
Hume, a financial reformer and a member of the new
school of philosophical radicalism, but the resolution
had no success. In 1833 it was suggested by Mr.
Archibald Prentice, editor and proprietor of The Man-
chester Times^ and afterwards the historian of the Anti-
Corn-law agitation, that the press should educate public
opinion on the subject of the Corn-laws. The matter
was taken up in the Manchester and Glasgow papers,
but the good harvests of 1834 and 1835, and the
prosperity following thereon, diminished public interest
and postponed the movement.

In 1834 Mr. Joseph Hume proposed in Parliament
that a fixed duty on corn be substituted for the fluctu-
ating scale then in operation. He was opposed strongly
by the landlords, and Sir James Graham contended that
** such a law would ruin not only landlords but the
state itself" ; thus the proposal lapsed. A good harvest
in 1835 reduced wheat to 35^. per quarter. Farmers
were despondent, and complained that they would be
ruined by the plentiful crop, since they could not pay

1 For detailed account see Rise of Democracy, by J. H. Rose, M.A.,
in this series.

62 The Free-trade Movement.

their rents. Labourers, however, profited by the abun-
dant and cheap food, and attempts to prove to them that
scarcity and high prices were a blessing failed, being
met by replies such as that of the old woman who said,
** You'll not persuade me that when there's plenty o'
meal puir folk will get less than when it is scarce".

With the years 1836 and 1837 there began a decline
in prosperity : financial trouble followed on speculation ;
trade was checked, /employment reduced, and distress
among labourers was wide-spread. The commercial
crisis was accompanied with a rise in prices. A pro-
posal was made in Parliament by Mr. Clay to modify
the Corn-laws and to substitute a fixed duty of los. per
quarter, but it was defeated. Early in 1837 an Anti-
Corn-law Association was started in London, which
consisted of seventy-four members. London, however,
was not the best centre for such an organization at that
time, but it anticipated the later movement in the north.
In February, 1838, Mr. Cobden, whose career will
shortly be noticed, attempted to induce the Manchester
Chamber of Commerce to take up the subject of repeal.
The Chamber had already sent in a protest against the
law, but no further step was taken at this time.

In March (1838) Mr. C. P. Villiers brought forward
in the House of Commons a motion to inquire into the
operation of the Corn-laws, which he repeated annually
until the repeal. He scarcely gained a hearing. ^ The
House of Commons was not yet prepared to listen ; it
was necessary to bring the pressure of public opinion to
bear upon the Goverment. When, in the following
July, Earl Fitzwilliam presented a petition from Glasgow
for repeal of the Corn-laws, the prime minister, Lord
Melbourne, replied **that the Government would not
move until they were assured a majority of the people
were in favour of a change", an admission that the
House of Commons would not lead, but would follow
public opinion. This doctrine, now so fully admitted,

^ Mr. Charles P. Villiers, the last survivor of the rep>ealers, who died on
the i6th January, 1898, at the age of 96, was one of the earliest and
staunchest advocates of the movement. In Parliament (where Mr. Villiers
represented Wolverhampton for more than sixty-three years) he annually

Agitation for Repeal of Corn-laws. 63

works well with an educated electorate, but in the
circumstances of 1838 it amounted simply to shelving
the question.

The agitation for repeal dates from July, 1838, when
a lecture on the Corn-laws was given at Bolton by a
Dr. Birnie, at which a young medical student, Mr. W.
Paulton, who afterwards became a great force in the
crusade, made a most effective speech. The following
September, Dr. Bowring, who had been abroad en-
deavouring to promote free commercial intercourse with
European states, and was an enthusiastic advocate of
Free-trade, lectured in Manchester to a select assembly
of some sixty reformers. He advanced many forcible
arguments in favour of complete freedom of exchange.
Among them he stated that: (i) **In France there are
millions willing to clothe themselves in English gar-
ments, and you have millions of hungry mouths to take
their corn". (2) '* In Hungary, not being able to sell
their corn to England, the people are turning their
capital to manufacturing their own cloth." (3) Holland
was dependent upon every country ; there were no Corn-
laws and no scarcity of food, but high wages and
abundant trade. (4) Universal trade was the means
of preventing war, for, "who quarrels with his bene-
factor— with those who confer benefits and blessings?"
(5) The victories of commerce and of peace were far
more glorious than any gathered in the fields of blood.

From this meeting the Anti-Corn-law League derived

introduced a motion for a Committee to consider and repeal the Corn-laws.
The following is a summary of the voting in the House of Commons on
Mr. Villiers's motion, and on several other important motions: —

For. Against. Majority.

1838. Mr. Villiers's motion 97

1839. That witnesses should be heard at the bar, 172 361 189

1839. Mr. Villiers's annual motion, 195 342 147

1840. ,, ,, , 177 300 123

1841. Sir R. Peel's vote of want of confi-

dence in the government, ... 312 311 I

1842. Mr. Villiers's motion, 90 393 303

1843. „ ,, 125 381 256

1844. Mr. Cobden's motion for inquiry into

agriculture, 153 244 91

1844. Mr. Villiers's motion, 124 330 206

1845. ,, ,, 122 254 132

1846. Sir R. Peel's motion for repeal, ... 327 229 98

64 The Free-trade Movement.

its origin.^ Other earnest addresses were made by
Colonel P. Thompson, author of the Corn-law Catechism^
and by Mr. Prentice. The latter drew attention to the
hard circumstances of the hand-loom weavers, who,
though scarcely able to afford to buy paper, had sent up
a petition with 22,000 signatures in favour of repeal.
As a first step, measures were taken to found an Anti-
Corn-law Association. Seven enthusiasts for reform
met on the 24th September, 1838, and decided to form
the association upon a popular basis with a five-shilling
subscription. On October 13th a provisional committee
of thirty-eight members ^ was advertised, including the
names of many who were afterwards prominent speakers
in the agitation, and amongst them that of John Bright.
Richard Cobden's name was added a week later. The
committee engaged Mr. Paulton of Bolton as lecturer.
The movement was now fairly started, and in December
a request was made to the president of the Manchester
Chamber of Commerce to call a meeting for the purpose
of petitioning Parliament.^ Ultimately the chamber
adopted a petition, as drafted by Mr. Cobden, demand-
ing '*the repeal of all laws relating to the importation
of foreign corn and other foreign articles of subsistence,
and the removal of all existing obstacles to the un-
restricted employment of industry and capital",

The struggle thus commenced, both as regards the
characters of the agitators, the methods they pursued,

1 " Manchester would become identified to all ages with the cause ; just as
Jerusalem was with the origin of our faith, and just as Mecca was in the
eyes of the Mahometans, so would Manchester be identified in the eyes of
historians as the birthplace and the centre of the greatest moral movement
since the invention of printing; one which would have a greater effect in
the world's history than any struggle that had ever taken place in the annals
of civilization. " — (Cobden's speech at Manchester, 23rd December, 1845. )

2 The following members of the original Manchester Anti-Corn-law
Association were on the Executive Committee when it dissolved in July,
1846: Richard Cobden, Archibald Prentice, George Wilson, W. Rawson,
W. R. Callendar, W. Evans.

«Mr. Henry Ashworth, one of the most active members of the League
from its foundation, relates in his Recollections of Cobden and the League
how this idea had originated with Cobden a year previously, "Going
home together one night after a meeting of the British Association, which
they attended at Liverpool, Cobden suddenly stopped and said, ' I'll tell
you what we will do ; we'll use the Chamber of Commerce for an agitation
to repeal the Corn-laws'."

Agitation for Repeal of Corn-laws. 65

and the ultimate issue, was one of the most remarkable
in English history, and one which called for unusual
energ-y and determination. It was a deliberate effort to
overthrow a system, supposed by its supporters to be
not only the bulwark of the agricultural industry, but
also necessary to the revenue of the nation, and this
system was supported by the richest and most influential
classes in the country, who were also directly interested
in its maintenance.

From the beginning, Richard Cobden was one of the
most active members of the association, and he was soon
recognized as the real leader of the movement, which
came to engross the best of his life and energies. In
order the better to understand and appreciate the motives
and actions of Cobden, it may be desirable to give
some account of his early life. He was born in 1804
near Midhurst, in Sussex, where his father was a small
struggling farmer. He was one of eleven children, and
obtained little education at home. His father failed,
and he was sent, at the cost of a relative, to a school in
Yorkshire for five years, where he received scant instruc-
tion and less sympathy. He then entered the office of
an uncle in London, who treated him with strictness,
but at twenty-one made him his commercial traveller in
cotton goods. During this period of hard work and
close attention to business the passion for knowledge
had developed in Cobden. He educated himself in his
leisure hours by assiduous study of the French language,
English history and literature; to these at a later time
he added mathematics and political economy. His occu-
pation gave him opportunities for gaining knowledge of
men and of public aff^airs, of which he was an acute
observer. After a few years' experience as commercial
traveller, he started business with two other young men
as commission agents in cotton goods. They afterwards
became cotton printers, and Cobden travelled now on
his own account. Being successful in business, he was
enabled to gratify his passion for the acquisition of the
knowledge of other countries and peoples by travel. He
visited successively France, Switzerland, America, East-
ern Europe, Egypt, and Asia Minor. He thus gained

(M460) E

66 The Free-trade Movement.

larger views of life, and also experience of men, both
invaluable for the public duties to which his natural crav-
ings were soon to direct his energies. At the age of
thirty-one he published a pamphlet on England, Ireland,
and America, and later, one on Russia. These publica-
tions displayed a very wide and accurate knowledge of
history, commerce, economics, and politics, and his
writings, even at this early period, were stamped by an
exceptional command of a clear and forcible style. Re-
garding this, we cannot do better than adopt the words
of his biographer, Mr. J. Morley, who speaks of him
as possessing **a ringing clearness, a genial vivacity,
a free and confident mastery of expression which can
hardly be surpassed, . . . what is striking in Cobden
is, that after a lost and wasted childhood, a youth of
drudgery in a warehouse, and an early manhood passed
amid the rather vulgar associations of the commercial
traveller, he should, at the age of thirty-one, have stepped
forth the master of a style which in boldness, freedom,
correctness, and persuasive moderation was not surpassed
by any man then living." Of his knowledge of public
affairs. Prof. Thorold Rogers writes: ** If exact and
careful knowledge of history constitutes learning, Cobden
was, during the years of his political career, the most
learned speaker in the House of Commons; ... his
facts, culled from all sources, were judiciously selected,
and were never challenged ".

Cobden had in a very high degree the faculty of
assimilating knowledge and of giving it practical appli-
cation; his remarks were always peculiarly apposite;
and he displayed remarkable persuasiveness, tact, and
self-control, equally in his controversies and in his inter-
course with men of all classes.

Sprung from the agricultural class,^ and educated in
business, Cobden's training and sympathies gave him a
predilection for commercial and industrial questions.

^ In his speech in Parliament on the distress of the country, February 1843,
Cobden says : " I am the son of a Sussex farmer. My ancestors were all
yeomen of the class who have been suffering under this system ; my family
suffered under it, and I have therefore as good or better right than any of
you to stand up as the farmer's friend, and to represent his wrongs in this
House."

Agitation for Repeal of Corn-laws. 67

His mind was eminently practical, regulated by reason
and conviction, and little by sentiment ; he grasped with
remarkable clearness and breadth the issues involved in
international commerce; he had no sympathy with war
and struggles for empire; he might be said almost to
have been possessed with the ''fixed idea" of an in-
dustrial era of peace, such as he believed free commerce
would inaugurate. His patriotism took the form of
seeking to promote the welfare of the nation by measures
which would increase the efficiency of labour and improve
the general standard of living. He conceived that a
period of universal peace might be advanced by means
of free international intercourse, and that the mutual
interests of nations in trade would ultimately cause w^ars
to cease. He has been called ^' the international man",
a term which fairly describes the cosmopolitan attitude
he adopted. Cobden's ideal^a reign of universal peace
based upon industry and friendly commercial relations,
mutually beneficial to nations — was certainly not ignoble,
though it was sneeringly described by the wit of a
brilliant woman of fashion as a *' bagman's millennium".
But Cobden greatly over-estimated the effects of com-
merce upon international relations, and underrated the
jealousies and passions of nations, the ambitions and
other disturbing factors which opposed the attainment
of universal concord ; his instincts, however, were right,
his aim was worthy, and his metht)d economically sound.
His views on general politics were mainly determined by
his dominant idea, and naturally included Free-trade.
In his own words: "To prohibit the import of corn,
such as is actually the case at this moment, is to strangle
infant commerce in its cradle ".

Cobden fully realized the advantages of free exchange,

/ and he devoted himself to work for its attainment ; his

/ life and speeches for some years, together with those of

;his warm friend and colleague, John Bright, form a

I history of the Free-trade movement. A lucid and close

'thinker, no one was better able than Cobden to expound

and illustrate economic principles, or to expose the

fallacies which clung around the Protectionist doctrine.

This he did with vigour and straightforwardness, and

k

68 The Free-trade Movement.

in simple and forcible language, devoid of rhetoric, and
with no attempt at anything but securing conviction by
force of argument. Some years after his death, his
friend. Bright, described the qualities of his style of
speaking as, ** clearness, logic, a conversational elo-
quence, a persuasiveness, which, when conjoined with
the absolute truth that there was in his eye and in his
countenance, it was almost impossible to resist".
Cobden's method was based upon appeal to reason and
argument; he had enthusiasm and persistence in a high
degree, and often displayed much feeling, but he relied
upon the understanding of his hearers for their conver-
/sion to the cause he championed.^ To his labours the
' success of the Anti-Corn-law agitation was mainly due.
It has been charged against the movement that the
manufacturers were fighting and providing funds for the
League in their own interests. This was true in a
certain sense, for their trade was languishing ; but they
also pleaded the cause of their workmen, who were
starving owing to want of employment, because foreign
markets were practically closed by the tax on the com-
modity with which foreigners were willing to buy their
goods. Further, it was a cause in which all purchasers
of food were interested, for the benefits accruing from
activity in trade and an abundant supply of food cannot

* The following extract will serve as an example of his homely and vigorous
style: — " We have been told by the right hon. gentleman that his object is
to fix a certain price for com; and hearing that proposition from a prime
minister, and listening to the debates, I have been almost led to believe that
we are gone back to the times of the Edwards, when Parliament was engaged
in fixing the price of a table-cloth, or a napkin, or a pair of shoes. But is
this House a corn-market? Is not your present occupation better fitted for
the merchant and the exchange? We do not act in this way with respect to
cotton, or iron, or copper, or tin. But how are we to fix the price of com?
... I will ask the right hon. Baronet, Is he prepared to carry out this
principle in respect to cotton or wool? I pause for a reply." (Sir R. Peel:
' ' I have said that it was impossible to fix the price of food by any legislative
enactment".) "Then upon what are we now legislating? I thank the
right hon. Baronet for that avowal. Will he oblige me still further by not
trying to do it? But supposing he will try, all I ask of him is— and again
I shall pause for a reply — will he try to legislate to keep up the price of
cottons, woollens, silks, and such like goods? There is no reply. Then we
have come to this, that we are not legislating for the universal people. Here
is the simple, open avowal, that we are met here to legislate for a class
against the people. "—(Speech on Mr. Villiers's Motion, Feb. 1842.)

Agitation for Repeal of Corn-laws. 69

be restricted to any one class or industry ; they concern
the nation as a whole. ' In a speech afterwards made in
Manchester/ Cobden admitted fully this class-interest in
the movement. He said, " I am afraid that most of us
entered upon the struggle with the belief that we had
some distinct class-interest in the question". As Mr.
Morley remarks, however, **The class-interest widened
into a consciousness of a commanding national interest.
The class-interest of the manufacturers and merchants
happened to fall in with the good of the rest of the com-
munity. "

At a meeting of land-owners in London, a defence of
the Corn-laws was drawn up; the following were some
of the chief propositions advanced: That a heavy
national debt required the tax; that one concession
would only lead to another; that the farm labourers
profited by wheat being at 8o5". to 1005. a quarter, since
high prices gave them high wages ; and that the agita-
tion was got up by speculators and incendiaries.

In February 1839, the Association sent up delegates to
London to offer evidence and present a petition at the
bar of the House of Commons. Mr. Villiers moved
that the witnesses should be heard, but his motion was
rejected. In March Mr. Villiers repeated his annual
motion in the House, but with no success. A like
resolution, introduced into the House of Lords by Lord
Fitzwilliam, was rejected by 224 votes to 24; Lord Mel-
bourne, on that occasion, remarking that to abolish
protection of agriculture **was the wildest and maddest
scheme that had ever entered into the imagination of
man to conceive ".

The Association was, in March, 1839, formed into a
permanent union to be called the National *' Anti-Corn-
law League", its objects being to continue the agita-
tion by every constitutional means until the end was
secured, to diffuse information through the press, by
circulars, pamphlets, and lectures, to raise funds, and
generally instruct and organize the country in regard to
the Corn-laws. 2 The ensuing agitation, which extended

^Oct. 19th, 1843.

2 As Cobden expressed it, "The House had refused to be instructed, but

70 The Free-trade Movement.

over seven years, and which ended in the reversal of pro-
tective legislation, is perhaps the most remarkable ex-
ample of a persistent, strenuous, and successful movement
carried out solely by arguments and appeals to facts;
and it should be noted that it was due to, and organized
by, men of business almost entirely, and was quite in-
dependent of political parties. In their pamphlets the
League tried to overthrow the common opinion that the
farmers gained by the duty: they endeavoured to set
forth the solidarity and mutual dependence of society,
and to prove that the real demand for agricultural pro-
duce must depend upon the existence of a flourishing
body of labourers of all classes, and that the interests
of the manufacturing and agricultural workers were in-
separable.

The League encountered much opposition in its propa-
ganda. At some places the lecturers were interrupted,
abused, and threatened, and disorderly persons broke
up the meetings. The Chartists, who looked to drastic
political reforms as the only means for gaining improved
social conditions, also joined in resisting the Free-traders,
and even defended the Protectionist doctrine. At a
meeting in Leeds the speakers of the League were vehe-
mently attacked by Feargus O'Connor, who posed as a
leader of the more violent section of the Chartists. He
had an intolerant contempt for an agitation organized
merely to secure cheap food, which he said ** would only
enable manufacturers to lower wages ". However, the
Anti-Corn-law movement appealed more forcibly to the
hungry people of Leeds than Chartism, and Leeds be-
came a centre of the Association.^ That section of the
press which supported the Corn-laws, also indulged in
strong language against the League, and denounced its
members as ** unprincipled schemers", "swindlers",
'* revolutionary emissaries ", "a disloyal faction ", &c.

A paper called The Anti-Corn-law Circular vjdiS next
started to spread the teachings of the League, and soon

the House must be instructed, and the most unexceptionable and effectual
way will be by instructing the nation ".

1 For details of Chartist Movement see Rise of Democracy, by J. H. Rose,
M.A.. in this series.

Agitation for Repeal of Corn-laws. 71

attained a wide circulation. Finding- no hall in Man-
chester sufficiently large for the meetings, Mr. Cobden
generously gave an open space of land in St. Peter's
Field as a site for a building in which meetings could
be held. A temporary pavilion was erected, which was
subsequently replaced by the Free-trade Hall, opened in
1843. It is an interesting fact that the spot made
notorious in connection with political reform by the
Peterloo massacre of 18 19, should thus have been de-
voted to a reform movement which aimed at obtaining
cheap bread for the people.

Soon after the opening of Parliament in 1840, the
delegates of the League waited in deputation upon Lord
Melbourne; they described the misery of the starving
workmen engaged in the northern industries, explained
the causes of their sufferings, and urged the advantages
of free commerce, but in vain. The prime minister
replied that ** repeal was impracticable". His frequently-
repeated objections, which still remain the standing
defences of Protection, though their weakness has been
often exposed, were, that the general opinion of the
world was against Free-trade; that if our ports were
free other nations would not relax their protective duties ;
and that to negotiate for reciprocal advantages was the
proper course. Before leaving London the deputation
interviewed the leaders of the Conservative party, but
met with no encouragement from them. The motion of
Mr. Villiers in the House of Commons was opposed
by the ministers. Nothing discouraged, the delegates
promptly met and passed a resolution pledging them-
selves not to relax their efforts until the grievance was
removed, and, setting aside all political aims, to work
solely for this end until it was achieved.

In May, 1840, Mr. Joseph Hume obtained a Select
Committee to inquire **into the several duties levied
upon imports, and how far those duties were for revenue
only or for protection ". This inquiry was most pertinent
to the agitation, as it brought out very clearly the dis-
tinction between taxation for revenue^ and taxation for
protection only, thus removing a source of confusion,
and rendering it "plain to all reflective men that the

72 The Free-trade Movement.

latter species of taxation was a mere burden and a
means of diverting- capital and labour to unprofitable
channels. The report of this Committee was instru-
mental in modifying the budgets of 1841 and of suc-
ceeding years.

During this year the League adopted another plan for
spreading their principles. The members of the council
themselves went forth as volunteer lecturers. Their
earnestness, fulness of knowledge, and influence, suc-
ceeded in drawing vast crowds, who were favourably
impressed by their arguments. Party politics were
entirely put aside by members of the League, who devoted
themselves exclusively to the removal of the tax on
bread. This was made the election test by repealers.
Neither political party gave them any countenance ; the
Tories were firm in their support of Protection and the
sliding-scale ; the Whigs, who were in office at the time,
professed to advocate a "moderate fixed duty", but no
measure was introduced.

The repprt of the Import Duties Committee bore fruit.
Lord Jonn Russell, who was unconsciously moving
towards the Free-trade position, proposed in his budget
for 1 84 1 to replace the sliding-scale by a fixed duty of
10 per cent; that is, of 8^. per quarter on wheat, 4^. 6d.
per quarter on barley, and 3^. 6^. on oats, and to
modify the duties upon sugar and timber. These pro-
posals roused a storm of opposition from the Tory party,
and gained no strong support from his own side. Sir
Robert Peel therefore proposed a vote of want of con-
fidence, which was carried by one vote, and the Govern-
ment appealed to the country.

In the succeeding election, August, 1841, Cobden was
returned for Stockport, and henceforth led the cause
in Parliament. The new Parliament showed a majority
against the Government. In the Queen's speech, and
in the debate on the address, the Government, by their
attitude towards the Corn-laws, made a bid for the
support of the Free-traders, but their proposals were
regarded by the Free-traders as merely an attempt at
compromise in order to retain office; and from the Pro-
tectionists, who were in a majority, they received no

Agitation for Repeal of Corn-laws. 73

favour. The 8s. duty was not acceptable, and the Mel-
bourne ministry resigned.

In this, his first debate, Cobden at once took rank as
a parliamentary speaker of the first order, and of a new
character. Mr. Morley thus describes him: ** He pro-
duced that singular and profound effect which is per-
ceived in English deliberative assemblies when a speaker
leaves party recriminations, abstract arguments, and
commonplaces of sentiment, in order to inform his
hearers of telling facts on the condition of the nation.
. . . He insisted that the Corn-law was in reality the
only matter which, at that moment, was worth debating
at all. The family of a nobleman, he showed the House,
paid to the bread tax about one halfpenny on every ;£^ioo
of income, while the effect of the tax on the family of
the labouring man was not less than 20 per cent."

Cobden made no delay in placing his position clearly
before the House. ** I call myself neither Whig nor
Tory, I am a Free-trader", he declared, and under
this banner he consistently fought until the battle was
won.

Peel came into office in September, 1841, as leader of
the Conservative party — a party mainly aristocratic
and agricultural, and consisting of avowed defenders of
the Corn-laws; he remained in office until he had re-
pealed those laws, and he accomplished this with the
same Parliament. Yet Peel, in taking office, was cautious,
while supporting the graduated scale, "not to pledge
himself to plans which, on reconsideration, he might
deem it expedient to modify". He had stated that "he
was for reforming every institution that really required
reform, but he was for doing it gradually, dispassion-
ately, and deliberately, in order that the reform might
be lasting". The term "Conservative" had been in-
vented by Croker as being less objectionable than Tory,
since it more distinctly admitted the idea of progress,
and it had found favourable acceptance with Peel. Peel
was not an economist in the scientific sense, but he was
a statesman and a man of sound judgment; he knew how
to accept the inevitable, and was open to be educated by
the logic of events, and he was capable of leading his

74 The Free-trade Movement.

party with him. His convictions were deep, if slow in
formation, and he was sincere; and, when convinced, he
had the courage of his opinions. In finance he was
strong and commanded confidence; he had to provide
revenue for a country loaded with debt, with a declining
income, and a revenue system which had no elasticity.
Many of his followers were fanatical believers in Protec-
tion; but Peel carried an open mind, and circumstances,
together with the arguments of his opponents, moulded
his ideas on the practical question with which he had to
deal. His mind was progressive, but he needed to be
convinced not only of the abstract validity of a doctrine,
but of its applicability to the circumstances existing,
before he would give his adhesion to it as a principle of
practical politics.

Peel's accession to office took place at a time when
the country was entering upon a period of acute suffer-
ing. Bad harvests, and a financial crisis which ushered
in a long and severe depression in trade, combined to
produce a winter of exceptional distress. In the manu-
facturing districts of England and Scotland many firms
failed, mills were closed, employment almost ceased,
and the destitution which ensued was terrible. Statistics
give a very inadequate conception of the misery which
was general among the working-classes. A few facts,
from those gathered by the League and recorded by Mr.
Ashworth, aff"ord some assistance in realizing the extent
of the disaster. In Manchester, we are told, ii6 mills
and many other works were stopped, 2000 families were
reduced to such want as to have pawned even their beds,
12,000 families were receiving poor relief, and thousands
subsisted on charity. Out of 50 mills in Bolton 30 were
idle, and 6995 persons, whose average earnings were
only i^d. a week, were aided in one month by the Poor
Protection Society. In Nottingham 10,580 persons were
receiving poor relief. In Leeds 21,000 persons were
earning on an average ii^d. a week. In Stockport so
many firms had failed that work had practically ceased,
and multitudes earned less than 10^. a week. Bury,
Rochdale, Wigan, Coventry, Paisley, Glasgow, and
many other towns had a similar record of failure and

Agitation for Repeal of Corn-laws. 75

distress. While the workings-classes were on the verge
of starvation, British corn was 65^. a quarter, and the
duty on foreign wheat was 24^. 8d. per quarter. The
new Government made no sign of relief, and Parliament
was not summoned during the winter.

The League claimed credit for helping to maintain the
peace and repress disorder among the starving popula-
tion, by the hope which they inspired of better prospects
when the repeal of the Corn-law should be accomplished.
They increased their efforts and pursued their propa-
ganda in the towns and villages by means of meetings,
lectures, and pamphlets, trusting that, as the public
became enlightened regarding the real operation of re-
striction on the import of corn, their success would be
assured. The severity of the suffering in those times is
reflected in the verses to which they gave rise. Ebenezer
Elliott calls for special mention as the poet of the move-
ment. In his Corn-law Rhymes and subsequent poems
he pours out a fund of indignation mingled with pathos
upon the law which he regarded as the chief cause of
the repeated distress. A brief specimen must suffice to
illustrate their style :

" Child, is thy father dead?

Father is gone !
Why did they tax his bread?

God's will be done !
Mother has sold her bed :
Better to die than wed !
Where shall she lay her head?

Home we have none."

Meanwhile the distress continued, and all classes
anxiously awaited the action of the new Parliament.
The Chartists clamoured for political reform as the only
remedy. The Free-traders continued to draw attention
to the scarcity of home-grown food, the exclusion of
foreign supplies, and the decline in the exports of British
manufactures by means of which an adequate supply of
foreign corn could be obtained. Others attacked the
new methods of industry as the cause of the distress,
and maintained that machinery was throwing men out

76 The Free-trade Movement.

of employment and leading to over-production and
general depression in trade.

Cobden replied to this charge by pointing out that
the workers in trades like stocking-weaving, in which
there had been no change in method for two centuries,
were distressed as much as those engaged in cotton
spinning and weaving, and that agricultural labourers
were almost equal sufferers, although in their trade no
machinery had entered. In the cotton trade, again, he
showed that the use of machinery had cheapened cloth-
ing, increased demand, and gained the trade both at
home and abroad, and had for many years supported
vast numbers during the time of foreign war and severe
taxation. Only after the war was the high protective
duty on corn imposed in 1815, and it was able to be
tolerated during periods of good harvests. But bad
harvests, with a growing population, had raised bread
to famine prices; and while the population had been in-
creasing, the existing Corn-laws checked the supply of
food, and cut away the foreign demand for British manu-
factures which would have purchased it. This was the
cause which aggravated the distress, though these laws
were supposed to be necessary to maintain rents.

It was in the distressing autumn of 1841 that the
exceptional powers and energies of John Bright were
enlisted actively in the Free-trade campaign. Bright
himself told the story many years after the death of
Cobden. He had suffered the deep affliction of the loss
of his young wife, and was overwhelmed with grief,
when Cobden called to condole with him. Before leav-
ing, Cobden said: ** There are thousands of houses in
England at this moment where wives, mothers, and
children are dying of hunger. Now, when the first
paroxysm of your grief is past, I would advise you to
come with me, and we will never rest till the Corn-law is
repealed." Bright accepted, and henceforth his wonder-
ful gifts of eloquence, fervour, and intellectual vigour
were devoted to the cause in which he ranks only after
Cobden. There was a remarkable contrast in the two
men in their temperament and natural endowments, but
a common sympathy bound them in the closest friend-

Agitation for Repeal of Corn-laws. 77

ship throughout the struggle and for the remainder of
their life.^

Parliament opened in February, 1842, with a sym-
pathetic reference in the Queen's speech to the suiferings
in the manufacturing districts, and a recommendation
*'to consider the laws which affect the imports of corn
and other articles". All parties waited with intense
excitement for the proposals of the new prime minister.
His speech defended the duties on corn as necessary
in the interests of agriculture, and to preserve Great
Britain from dependence upon other countries. Peel,
as he states in his Memoirs^ was at this time under the
belief that special burdens were imposed upon agricul-
ture, and he was also impressed by a fear of dependence
upon other countries for food, — both points on which,
subsequently, his opinions were completely changed.
He desired to keep wheat between 54^. and 585-. a
quarter, as a remunerative price for agriculture, and for
this purpose he proposed a modified sliding-scale, com-
mencing with a duty of 20^. when wheat was as low as
Sij-., and falling to i^. when it reached 735-. The pror
posal was received in silence, but Lord John Russell's
amendment of a fixed duty was rejected. Mr. Villiers's
amendment, "that all duties on importations of corn,
meal, grain, and flour do now cease and determine",
led to an animated debate extending over five days, in
which Cobden spoke with great effect. He effectually
exposed the common fallacy that high prices made
high wages, and urged that it was a well-fed people
alone that could either defend the country or produce
wealth. He charged the House "with deteriorating the
population and thus spoiling both the animal and the
intellectual creature". "It is not", said he, "a potato-
fed race that will ever lead the way in arts, arms, or
commerce." He demanded that, if corn prices were to
be fixed by law, prices of other commodities must also
be fixed, and if so, a sliding-scale for wages would be
equally just and necessary.

During this session 2881 separate petitions, signed by

^ For the account of Bright s work in the campaign, see the volume in
this series on John Bright, by C. A. Vince, M. A.

78 The Free-trade Movement.

1,540,755 persons, were presented against the Govern-
ment measure, or in support of total repeal. The bill
y for a sliding-scale became law on the 29th April. Peel's
new Income-tax Bill followed; it was estimated that this
tax would yield ;£^3, 750,000, which would be sufficient to
cover the deficit and allow of customs reforms affecting-
750 articles. The new tariff now introduced was benefi-
cial, and materially reduced the duties on many articles
of consumption. Peel evidently hoped for a return of
prosperity with better harvests and the operation of the
new tariff. He had not yet got rid of the idea that
agriculture, as the leading industry, needed special safe-
guards,^ and in his concern about dependence upon
foreign countries for food, he forgot that starvation
was actually existing, and that on every occasion when
prices were at famine-level the country did look abroad
for assistance, and imported additional food; but, as
there was no regular free market in England for foreign
corn, and no uniform demand, it was extremely difficult
in circumstances of scarcity to purchase corn, except
at prices so high as to give no real relief to starving
labourers. A further matter which the ministry had not
fully realized was the extent of the large manufacturing
industries and the vast population dependent upon them,
which found in foreign countries a good market for their
produce, while those countries were able to pay for such
produce with the food necessary to the support of the
labourers in those manufactures.

All the year (1842) the distress in the country in-
creased. Deputations waited upon the prime minister
to explain the suffering and its causes, and to demand
the removal of the corn duties on grounds of humanity.
Peel recognized the suffering and expressed his sym-
pathy, but was not yet apparently convinced of the
remedy. He was aware that the duties, once repealed,
could not be reimposed, and he hesitated.

The continued depression was, on the whole, borne

^ In his Memoirs, part iii. vol. ii. p. 98, Peel writes: " I had adopted at an
early period of my public life, without, I fear, much serious reflection, the
opinion generally prevalent at the time among men of all parties, as to the
justice and necessity of protection to domestic agriculture".

Agitation for Repeal of Corn-laws. 79

by the suffering classes with remarkable patience. The
League continued to educate the people, and to teach
them to look for the revival of trade and an increased
supply of food from foreign countries consequent on free
import. The more advanced Chartist leaders, however,
seized the opportunity to urge their political remedies.
Soon the effect of their more violent agitation made
itself apparent. The half-starved mill-hands of South
Lancashire were incited to cease working and to make a
demonstration, which threatened a serious disturbance
of the peace. The turn-out began in Ashton-under-Lyne,
and spread to all the cotton district ; crowds of factory-
hands went about compelling the mill-hands in other
towns and villages to cease working, and declaring their
intention not to return to work until they had gained the
Charter and higher wages.

The disturbance in Manchester was soon suppressed
after the reading of the Riot Act, but in other towns of
the cotton district the excitement continued for about a
fortnight, and caused some alarm. At Rochdale Mr.
Bright helped to restore order and quiet by the publica-
tion of a very temperate and judicious address to the
working-men, in which he calmly discussed the question,
explained the causes of the misery, and showed clearly
that the Charter was no remedy for their condition, and
still less was public disturbance or interference with
work; the problem was economic, and could only be
settled by economic treatment such as the League pro-
posed. In South Lancashire the agitation ended with-
out violence, but in Staffordshire and other districts
which the Chartists visited serious riots took place, and
the troops had to be called out.

The League now determined to carry the crusade into
the agricultural counties, and to teach the farmers and
rural labourers that they were interested in the success
of manufactures, and had a common cause with the
workers in those industries in their need for cheap food
and enlarged foreign markets. For this purpose a fund
of ;£^5o,ooo was asked. In January, 1843, the spacious
Free-trade Hall, built expressly for meetings of the
League, was opened with a crowded public meeting, at

8o The Free-trade Movement.

which the chairman announced subscriptions amounting"
to ;£'40,ooo. In February, 1843, Lord Howick (after-
wards Earl Grey) moved in Parliament for a committee
to inquire into the cause of the distress, but the motion
was rejected by 306 votes to 191. The debate acquired
an unfortunate tone from an incident which affected the
relations of the principal opponents, the premier and
Mr. Cobden. Sir R. Peel's private secretary (W. E.
Drummond) had been assassinated in the street by a
lunatic. It was supposed the blow was intended for the
premier, and the rumour was circulated that an attempt
on the premier's life had been sanctioned by the
Leaguers. No proof was offered, and no direct charge
was made, but the movement was discredited by the
rumour, which gained some acceptance.

In the debate in the House Mr. Cobden, with his
usual candour, attacked the Corn-law restriction, and
expressed himself during his speech as holding the
prime minister responsible for the distress and suffer-
ing in the country, which could be relieved by the
removal of the duty. Sir R. Peel, in reply, agitated
and overcome by the painful circumstances of the death
of his friend, charged Cobden with making him indi-
vidually and personally responsible, and with menacing
him by insinuations. The excitement in the House was
intense. Mr. Cobden denied indignantly the imputation,
or the use of the word personal^ and repudiated any
possible meaning but that the prime minister, as such^
was responsible for the policy of the Government. A
most painful scene followed.

In spite of the disclaimer of Cobden, and its ultimate
acceptance by Peel, the suggestion was promulgated
by the hostile press and by enemies of the League. In
his after life Peel made ample amends for the accusation,
and admitted the honesty of purpose and the purity of
method adopted by the League; but for a time the
charge circulated, and the painful feeling generated
among the members of the League was not readily
removed.

In March, 1843, the League devoted a week to in-
structing the metropolis in Free-trade views. Drury

Agitation for Repeal of Corn-laws. 8i

Lane Theatre was engaged; vast assemblies crowded
to hear the addresses, and, both in numbers and enthu-
siasm, the success far exceeded the expectations. Cob-
den and Bright spoke with their usual force and
persuasiveness. Among the speakers should be men-
tioned Mr. W. J. Fox, afterwards member for Oldham,
whom Cobden describes as "one of the most dis-
tinguished and accompHshed orators of the age". He
did good service for the League, and impressed his
audience powerfully by his eloquence and passion.

The movement in the agricultural counties went on
vigorously. The lecturers were assisted by leading
members, including Cobden and Bright. Lecturers
visited every county town from Maidstone to Kelso, and
in spite of opposition^ they carried conviction and gained
adherents among the tenant farmers and labourers.

In July, 1843, Mr. Bright was returned as member
for Durham. His advocacy henceforth in the House of
Commons considerably strengthened the position of the
League.

As the influence of the movement widened, it was
decided to raise a fund of ;^ 100, 000, to engage Covent
Garden Theatre for fifty nights for a bazaar and demon-
stration, and to publish a weekly paper. The League,
The paper was started in September, 1843, under the
guidance of Mr. Paulton, who had proved himself so
powerful and capable a lecturer for the League. Cob-
den and Bright wrote constantly for it, and their lucid
and trenchant articles, thus widely distributed, were
effective in advancing the movement. During this year
alone more than 9,000,000 tracts or stamped publica-
tions, weighing 100 tons, were distributed, and 650
lectures were delivered. Two important gains were
made at this stage, which strengthened the League

^ Examples of the obstruction they encountered are instructive. At
Arundel they were denied the use of the town-hall by the mayor, and of
the hotel by the landlord, and one farmer offered a bushel of wheat to any-
one who would throw the lecturer into the river. At Petersfield, on return-
ing from giving his address, the lecturer was turned out of the inn by the
landlord. At Louth, being denied the use of a public building, the lecturer
spoke from a gig in the market-place, and was fined by the magistrate for
making an obstruction.

(M460) F

82 The Free-trade Movement.

with the country people. W. S. Jones-Lloyd (after-
wards Lord Overstone) declared himself a convert, and
sent a subscription ; and Earl Fitzwilliam not only gave
his adhesion and subscription, but attended meetings,
and strongly advocated the cause with great ability.

The TimeSy which had often assailed the movement,
in a leader of November i8th, 1843, admitted the grow-
ing importance of the League. After recording the
subscriptions and the persistence of the agitators, it
continued: ** These are facts important and worthy of
consideration. No moralist can disregard them, no
politician can sneer at them, no statesman can under-
value them: he who collects opinions must chronicle
them. He who frames laws must to some extent con-
sult them. The League may be a hypocrite — a huge
Trojan horse of sedition. But the League exists. . . .
A new power has arisen in the State, and maids and
matrons flock to theatres as though it were but a new
translation from the French. . . . We acknowledge
that we dislike gregarious collections of cant and cotton
men. But we cannot but know that whatever is the
end of this agitation, it will expire only to bequeath its
violence and its turbulence to some successor."

On the first day of the New Year (1844) the Duke of
Westminster sent a letter, congratulating the League on
account of their rapid progress, and inclosing a cheque
for ;^500. He added: ** I am satisfied that such would
be the prosperity of all classes from the abolition of this
impost, such the advantage that would accrue to all the
moneyed concerns of the community, that in a very short
time the general wealth would be so far augmented that
the national revenue would outrun the amount of any
duty that has been proposed ".

The League now turned their attention to pushing
their propaganda in Scotland. In Glasgow, at the first
meeting, ;£^30oo was raised. Mr. Bright and Mr. Cob-
den set out for Edinburgh. At Perth Mr. Cobden spoke
with much effect, and Lord Kinnaird, at the same meet-
ing, powerfully supported the repeal. "As a landlord,"
he said, ** I find the Corn-law to be positively hurtful to
me instead of an advantage, for it impoverishes my

Agitation for Repeal of Corn-laws. 83

customers, and consequently has an injurious effect upon
my profits.'/' The demand for speakers at meetings in
Scotland became so great that Cobden and Bright
separated, each with a group of friends. Cobden went
east, and Bright took the west. On this Scotch tour
Cobden writes : **Our progress has been gratifying in
the extreme. Glasgow, Edinburgh, Kirkcaldy, Dundee,
Perth, and Stirling, have all presented me with the free-
dom of their burghs, and I have no doubt I could have
become a free citizen of every corporate town in Scot-
land by paying them a visit. All this is due to the
principles we advocate." Bright was much impressed
by the intelligence of the Scotch, and their keenness in
discerning economic fallacies. He comments humor-
ously on the popularity of himself and his colleagues,
but notes the lack of financial response. Soon after
their return, at Wakefield Lord Morpeth (afterwards
Earl of Carlisle), a new adherent, appeared on the plat-
form, and declared that ''the true and permanent
interests of the agricultural, manufacturing, and com-
mercial classes are indissolubly united, and their surest
basis is in the freedom of trade and industry ".

At the opening of Parliament in 1844 the prime
minister congratulated the country on the improvement
in trade and prosperity. Lord John Russell, in reply,
attributed whatever improvement had taken place to the
fall in the price of bread, but he still argued in favour of
a fixed duty on corn for revenue purposes only. Sir
R. Peel pointed out that such a duty would have to be
applied equally to home-produced corn ; he indicated his
preference and adhesion to the sliding-scale on imported
corn, and stated that *' he did not contemplate any
alteration in the existing law ".

The belief was, however, growing among the Free-
traders that Peel was rapidly approaching the position
when he would declare for repeal of the Corn-law, and
that he only awaited the suitable opportunity to state
his convictions, when this could be done without com-
promising the Government.

During the month of February, 1844, the League
conducted a special agitation in London; large public

I

\A

84 The Free-trade Movement.

meetings were held in Covent Garden Theatre. In
March, Cobden brought forward in the House of Com-
mons a motion for the appointment of a, committee '*to
inquire into the effects of the protective duties on the
interests of the tenant-farmers and labourers of this'
country". He proved the failure of Protection to main-
tain farmers' profits or labourers' wages; "many farmers
had taken farms after the act of 1815, calculating on
selling their wheat at 80^. ; it had fallen to 505-. ; but the
rents remained fixed on the basis of the higher price'*.
Cobden argued that direct legislation could not regulate
the price of commodities and prevent fluctuations; it
might increase pauperism and destroy trade, banish
capital, and check or expatriate the population ; but it
could not keep prices steady and secure the farmer that
price on which he had counted when he undertook his
rent obligations; farmers had been deceived by such
legislation into making contracts which destroyed their
profits. He went on to show that the case of the
labourers was far worse than that of the farmers, and he
produced detailed evidence from many counties to prove
their misery and degradation. Humanity and justice to
them demanded an inquiry into the working of a system
which, while professedly maintained in the interest of
agriculture, allowed those who worked upon the land
to starve. He concluded an address, convincing by its
arguments and descriptions, by moving for a select
committee of inquiry, because ** the present system robs
the earth of its fertility and the labourer of his hire,
deprives the people of subsistence and the farmer of
feelings of honest independence".^ Mr. Bright followed
with a forcible appeal, and urged that **if the majority
thought that the justice of the Corn-laws could be proved,

^The following is an extract from this powerful speech: — "The right
hon. Baronet opposite (Sir R. Peel) has confessed that he cannot regulate
the wages of labour or the profits of trade. Now the farmers are dependent
for their prices upon the wages of the labourer and the profits of the trader
and manufacturer ; and if the Government cannot regulate these — if it cannot
guarantee a certain amount of wages to the one, or a fixed profit to the
other — how can it regulate the price of agricultural produce? The first
point to which I should wish to make this committee instrumental is to fix
in the minds of the farmers the fact that this House exaggerates its power
to sustain or enhance prices by direct acts of legislation. The farmer's

Agitation for Repeal of Corn-laws. 85

they would grant the committee at once". The com-
mittee was nevertheless refused.

In June Mr. Villiers's motion for repeal again came
forward. Mr, Villiers attacked the argument for inde-
pendence by showing that this country was dependent
upon other countries for the materials of its manufac-
tures, and thus for the means by which millions of
labourers could earn their bread, while it rejected the
bread itself, which could only be obtained in sufficiency
by selling the produce of that labour in exchange for
foreign corn. He dwelt upon the embarrassed condition
of farmers, and the low scale of civilization of the
labourers — the consequence of their necessitous con-
dition. Viscount Howick maintained that the question
was purely one of rent, in which farmers and labourers
received no consideration. Mr. Cobden examined the
defence of the Corn-laws, that they enabled the protected
classes to pay taxes. He showed that the incidence of
the tax on corn was upon the consumer, and argued,
moreover, that it caused an absolute loss ; he also proved
from statistics that revenue rose as corn prices fell, and
declined as prices rose.

Mr. Bright attacked the plea of special burdens on
land by showing that rents fell when rates were high,
that rates fell upon all kinds of industries and property
equally with land, and that if it were not so, the proper
method was to deal with the particular burden, and not
to create another. The motion was lost.

The depression grew and became more severe among
the agricultural labourers, whose wages fell to 7^. and
5^. a week in 1844. With wheat at 51J. 3<^. a quarter,
labourers were existing on potatoes and meal; their
standard of living was so degraded as to approach
starvation level. More than one-eighth of the population

interest is that of the whole community, and is not a partial interest, and
you cannot touch him more sensitively than when you injure the manu-
facturers, his customers.

" I do not deny that you may regulate prices for a while — for a while you
have regelated them by forcing an artificial scarcity ; but this is a principle
which carries with it the seeds of self-destruction, for you are thereby under-
mining the prosperity of those consumers upon whom your permanent welfare
depends. A war against nature must always end in the discomfiture of those
who wage it."

86 The Free-trade Movement.

of Suffolk and Essex was upon the poor-rates, and the
wretched peasantry, prompted by their misery and
hunger, once more resorted to incendiarism and set fire
to the ricks of corn, — as some of them admitted — to
raise the price of wheat, since in their ignorance they
had adopted the teaching that *' high prices make good
wages ", and sought to give it practical effect.

The agricultural distress continued through the winter,
and on March 13th, 1845, Mr. Cobden moved in the
House to appoint a select committee ''to inquire into
the causes and extent of the alleged existing agricultural
distress, and into the effect of legislative protection upon
the interests of land-owners, tenant-farmers, and farm-
labourers ". This speech affords perhaps the most per-
fect example of Cobden's style of debate. It displays
his masterly and comprehensive grasp of the subject ; it
is crowded with pertinent facts narrated in an orderly
and forcible manner, and the conclusions are enforced
by arguments which proved unanswerable. *' How is
it", he asks, ''that in a country overflowing with capital,
when there is a plethora in every other business — when
money is going to France for railroads, and to Pennsyl-
vania for bonds — when it is connecting the Atlantic with
the Pacific by canals, and diving to the bottom of Mexi-
can mines for investment, — it yet finds no employment
in the most attractive of all spots, the soil of this countrj'
itself?" He answers: "Capital shrinks instinctively from
insecurity of tenure, and we have not in England that
security which will warrant men of capital investing their
money in the soil ". He goes on to maintain that ' ' the want
of leases and security deters tenants from laying out their
money in the soil." "Tenants therefore are prevented
by their landlords from carrying on cultivation properly.
They are made servile and dependent, disinclined to im-
provement, afraid to let the landlord see that they could
improve their farms, lest he should pounce on them for
an increase of rent." And he showed from specimens,
that when leases were granted, the "covenants were of
such a preposterous character that I will defy any man
to carry on the business of farming properly under
them". He quoted the case of one member of the

Agitation for Repeal of Corn-laws. 87

House who had been publicly rebuking farmers for not
growing flax, while in his own leases there was a clause
which prohibited flax-growing. But the most powerful
section of this speech is that in which he demonstrates
from agriculture the fundamental fallacy of Protection —
taxing the whole community for the benefit of a section.
Taking clover, beans, oats, hops, cheese, in succession,
he showed that for the sake of giving a monopoly to a
few districts in each of these products, the whole agri-
cultural industry was oppressed and burdened. He
stated that many farmers had resented this folly, and
had placed their names on the books of the Anti-Corn-law
League, ** comprising some of the most intelligent men
that are to be found in the kingdom". While linseed,
oats, &c., were excluded by duty, fat cattle were im-
ported duty free. ** But to eikclude provender for cattle
and to admit fat cattle duty'free, was one of the greatest
absurdities in legislation that ever was." Turning to
the defence that the agricultural classes were large
consumers of manufactures, he asks: ''What sort of
consumers of manufactures do you think agricultural
labourers would be with the wages they get?" ''There
are 960,000 agricultural labourers in England and Wales,
and each of them does not spend 30^. a year in manu-
factures on his whole family, if the article of shoes be
excepted." "Then", he goes on, "I would ask what
can they pay on 8s. a week to the revenue?" In a
powerful peroration he appealed to the gentlemen, the
high aristocracy of England, "to play in a mercantile
age that noble part which in feudal times had made their
ancestors the leaders of the people"; but he adds, "if
you are found obstructing that progressive spirit which
is calculated to knit natjons more closely together by
commercial intercourse ,^if you give nothing but oppo-
sition to schemes which almost give life and breath to
inanimate nature, and which it has been decreed shall
go on, then you are no longer a national body".

This speech made a marked impression upon Sir
Robert Peel. Mr. Morley thus describes it: — "The
prime minister had followed every sentence with ear-
nest attention ; his face grew more and more solemn as

88 The Free-trade Movement.

the argument proceeded. At length he crumpled up the
notes which he had been taking, and was heard by an
overlooker, who was close by, to say to Mr. Sidney
Herbert, who sat next him on the bench, *You must
answer this, for I cannot*."

Making use of every legitimate device, the League, in
May, 1845, displayed their enterprise and regard for
orthodox methods of procedure by organizing a great
bazaar in Covent Garden Theatre; by this means they
raised £2^,000, gained an immense advertisement of
their aims, and secured many adherents to their cause.

In Parliament Lord John Russell, on May 26th, moved
a series of resolutions, in which, while repeating his
demand for a fixed duty, he practically admitted the
principle of the League, and employed their arguments.
The Free-trade doctrine was at length gaining ground,
and it was becoming very evident to the leaders of the
movement that it was only a question of time. before the
premier would be completely convinced and would adopt
their views.

In the autumn wet weather caused a bad harvest and
a sudden rise in bread, which created much apprehension
among ministers. But a more serious evil was at hand.
Ireland had for some time adopted the low diet of pota-
toes as her standard food, and in some parts potatoes
were almost the only produce of the land, and the sole
means of subsistence. In the autumn of 1845 the crops
were attacked by blight, and the people were threatened
with famine. It was necessary to act promptly if terrible
disaster was to be averted. The ministry sent a com-
mission to inquire into the state of the food supply in
Ireland, and Mansion House Relief Committees were
formed in Dublin, which demanded free admission of
food to combat the spreading calamity. In Manchester
the League held a vast meeting and appealed to the
Government to grant relief by opening the ports. The
Cabinet met frequently, but could not agree to the large
measures for relief proposed by Peel. Lord John Russell
seized the moment to renounce his belief in a fixed duty,
and in a public letter to the electors of the City he an-
nounced his somewhat tardy conversion to complete

Agitation for Repeal of Corn-laws. 89

Free-trade principles. ** Let us then unite", he said,
**to put an end to a system which has been proved to
be the blight of commerce, the bane of agriculture, the
source of bitter divisions among classes, the cause of
penury, fever, mortality, and crime among the people."
Other public men followed, including Lord Macaulay.
The circumstances of the time by their urgency made
many rapid conversions.

The Cabinet meantime hesitated to adopt the prime
minister's plan, until at length the Duke of Wellington
declared that he would give Peel his support, and re-
commended the rest of the ministers to do the same.
This was at the beginning of December, and on the 4th
The Times startled the country with the announcement
that the Corn-laws were about to be repealed. How-
ever, Peel could not overcome the resistance of Lord
Stanley and the Duke of Buccleugh, and he felt it his
duty to resign office, which he did on the 5th December.
He promised Her Majesty to give his personal support
to Lord John Russell in carrying the measure of repeal,
and she accordingly asked Lord John to form a ministry.
He was, however, unable to do so, and Her Majesty
speedily recalled Sir Robert Peel and asked him to re-
sume office. This he did, replacing Lord Stanley by
Mr. Gladstone. His return to office in the altered cir-
cumstances left Peel free from past party pledges, except
in the opinion of rabid Protectionists like Lord Bentinck.
He came back to save the country from the calamity
with which famine threatened it, and he proceeded at
once to formulate his measure for abolishing the Corn-
laws. The League, meanwhile, was actively urging on
the counties the necessity for action: a great meeting
was' held in the Free-trade Hall on the 23rd December,
when it was determined to raise a monster subscription
of ;^25o,ooo. Towards this sum ;^6o,ooo was sub-
scribed on the spot, and in a few days the amount
reached ;^i 50,000, so great was the enthusiasm and the
liberality evoked by the critical condition to which the
movement had now been brought.^

^ "The Chairman at once announced his readiness to receive the names
of subscribers ; and a scene which defies description immediately followed^

go The Free-trade Movement.

Without delay Peel now brought in his measure for
abolishing the Corn-laws. He proposed that they should
cease on ist February, 1849, with the exception of a
registration duty of i^. per quarter, and that in the three
years' interval the duty on wheat should be los. when
the price was u^der 48^., falling to 4^. when the price
reached 53^. The same bill proposed to abolish or re-
duce duties on 150 other articles of food, raw materials,
and manufactures.

After a lengthened debate, in which the opposition to
Peel was led by Mr. Disraeli in a virulent personal attack,
the bill was carried in the House of Commons on the
1 6th May. It was passed quickly through the Lords by
the Duke of Wellington, and became law on the 25th
June, on the very day on which Peel was defeated on
the Irish Coercion Bill.

Peel's Corn Bill had passed the third reading by 327
votes to 229. The Irish Coercion Bill, on which he left
office, was defeated by 294 votes to 219.

In announcing his resignation of office. Peel made a
most eloquent and affecting speech, in which he ascribed
to Cobden the chief credit of passing the Corn Bill. He
said: **The name that ought to be associated with the
success of the measure is the name of a man who, acting,
I believe, from pure and disinterested motives, has advo-
cated this cause with untiring energy and by appeals to
reason ". He concluded with the dignified and memor-
able passage: ** I shall leave a name execrated, I know,
by every monopolist who would maintain Protection for
his own individual benefit. But it may be that I shall
leave a name sometimes remembered with expressions
of good-will in the abodes of those whose lot it is to
labour and to earn their daily bread by the sweat of
their brow, when they shall recruit their exhausted
strength with abundant and untaxed food, the sweeter
because it is no longer leavened by a sense of injustice."

Peel has been charged with inconsistency. He took

in which gentlemen were calling out in rapid succession 'j^iooo for me' and
'_;^iooo for me ', until no less than twenty-three names had followed one an-
other for the like sum. There were twenty-two others who put down ^^500
each, and these, together with other smaller sums then announced, amounted
to more than ^60,000." — {Cobden and the League, Ashworth, p. 200.)

Agitation for Repeal of Corn-laws.

office in 1841 as the minister of a party pledged to main-
tain the Corn-laws, and he repealed those laws against
the wishes of the majority of that party; yet Peel was
noted for his sincerity and honesty. The solution of the
paradox is in that very sincerity of purpose towards his
country. He became slowly but surely, convinced of the
error of Protection : he was not a man of impulse ; his
mind was moulded under the influence of facts and strict
logic. The frequent sufferings of the people were the
strongest factor in his conversion; he saw that under 1
the existing law it had not been possible for them to j
obtain sufficient food; finally, the Irish famine made it a 1
pressing necessity that something should be done. As
Bright expressed it: ''Famine itself, against which we
had warred, joined us ". He could have resigned office
and have left the responsibility to his successor, and
thus have escaped the charge of dishonesty to his party;
but he felt the responsibility of a starving people more
than the reproach of a deserted party, and he endeavoured
to induce his Cabinet to relax the prohibitions. Failing
in this aim, he resigned his office and promised his sup-
port to his successor in relieving the pressure of the
Corn-laws. When Lord John Russell failed to form a
Government, without hesitation Peel obeyed the request
to resume office, and accepted a task which he knew
would discredit him with his party. He at once candidly
explained his position and his intentions. His views
had undergone a change; the facts of misery and the
menace of famine were the forces that finally convinced
him, and he was courageous and magnanimous enough
to face all the contumely of a charge of dishonesty to
save a nation from starvation and to inaugurate a policy
which he was now assured was the only sound and just
one. His duty was to his country, and he would fulfil
it at any cost. Confident in the consequences of his act,
he left the judgment of his conduct to posterity, in the
assurance that his name would live associated with one
of the most beneficent measures ever passed for the
people of this country. And the judgment of posterity^
has not belied his anticipations. Peel ranks as one of -
the noblest and truest of British statesmen. The repeal J

92 The Free-trade Movement.

which he effected is the most permanent of his achieve-
ments. Many financiers regard Peel's bill of 1844 as
the greatest reform in the theory and practice of bank-
ing, and as having been the means of placing our cur-
rency upon a sound basis; but his fiscal reforms, of
which the repeal of the Corn-law was the climax, be-
came the corner-stone of a new edifice of finance built
up on principles which started this country on a period
of unrivalled prosperity.

The Corn-law of 181 5 had been passed in the interests
of land-owners ; its avowed object was to enable them to
maintain rents and meet the burdens which they im-
agined to have been unduly placed upon them by the war.
It was passed in the interests of a class — an aristocracy
of land-owners, and it proved to be inimical to the in-
terests of the majority of the people, who in this struggle
were represented by the manufacturers, a new and
powerful class which had arisen within half-a-century,
and between whom and the landed aristocracy a strong
jealousy then existed. The manufacturers were them-
selves as much interested in the abolition of Protection
as were the landlords in maintaining it. There is
nothing exceptional in this attempt of *' interested
sections " to retain or extend their advantages. Ex-
amples are always to be found, and everywhere, — in rail-
ways, breweries, trade-unions, manufactures, teachers'
associations, &c.; most questions which are settled by
the votes of groups are determined almost entirely as
they affect the special interests of those groups.

Protection for agriculture exists in France and Ger-
many, where much of the land is held in small portions,
and it would probably have been adopted in England,
in the same circumstances which existed in 1815, had
England been a country of small landholders. In the
United States and most of the colonies it is advocated
and upheld in the interests of the manufacturing classes.
It has been said that the Corn-law question was finally
decided as a class question. This is not strictly correct;
the agitation began partly as a matter of rival interests,
but the larger interest of the community soon outgrew
other considerations. It was argued and discussed on

Agitation for Repeal of Corn-laws. 93

economic grounds; it was debated and carried by the
convincing reasoning supplied from Adam Smith, who
had written forty years before the duty of 181 5 was im-
posed; and it fell because the principle was shown to be
unsound, and the practice to be economically a loss and
an injury to the community as a whole.

The work of the League was now virtually accom-
plished. A few days after the passing of the Bill a
meeting was held at the Free-trade Hall, when Cobden
delivered an address, in which he paid a warm tribute
to Sir Robert Peel. **If he has lost office," said Cobden,
*'he has gained a country. For my part, I would
rather descend into private life with that last measure of
his, which led to his discomfiture, in my hand, than
mount to the highest pinnacle of human power by any
other means." Mr. Bright followed with a stirring
speech, in which he complimented the House of Lords :
** I must confess that I have a greater respect for the
House of Lords, from watching their passing of this
Bill, and the manner in which they have passed it, than
I ever had at any former period".

Before separating, the League presented their inde-
fatigable chairman, Mr. George Wilson, with a sum of
;£'io,ooo in recognition of the invaluable services which,
during seven years, he had performed gratuitously, and
with remarkable devotion, tact, and sagacity. The
League was then quietly dissolved. It was revived for
a brief period in 1852 when Lord Derby and Mr. Disraeli
came into office, and an alarm was raised by a speech of
Lord Derby's that an attempt would be made to restore
a Protectionist policy.

The removal of the remaining restraints on commerce
are soon chronicled. In 1849 the Navigation Laws
were finally abolished after a brief struggle with the
Protectionists. In 1852 Mr. Gladstone became chancellor
of the exchequer, and immediately proceeded to complete
the policy of his master in finance. He removed the
duties on 123 articles, and reduced those on 133 others,
including most of the remaining duties on food. In
i860, after an interval disturbed by the Russian war, he
resumed the task of simplification, and reduced the

f^ OF THE ^^-X

i UNIVERSITT \

y

94 The Free-trade Movement.

number of taxed imports to 48, removing the last duties
on manufactures (wool and silk), and all differential
duties. A few other reforms have since been effected;
the timber duty was abolished in 1866, the shilling re-
gistration duty on corn in 1869, and sugar was freed in
1875. The English tariff is now • non-protective ; it is
simple in principle, being levied on only 15 classes of
goods and for revenue only; of these, tobacco, tea,
spirits, and wine produce about nine-tenths of the whole
customs revenue of ;£'2 1,250,000.

One other matter calls for notice as being part of the
\ direct development of the Free-trade movement. This
• was the negotiation of the Treaty of Commerce with
France in i^^ by Cobden and Chevalier, with the assist-
ance of the Emperor Napoleon III., who, no doubt, was
the more inclined thereto from political motives. By
this treaty Great Britain agreed, on her side, to lower
the duties on French brandy and wine, to complete at
once the abolition of duties on manufactures, and not to
re-impose an export duty on coal to France. France
undertook to abolish prohibition of British goods, to
lower the duties of all British staple manufactures of
textiles, iron, machinery, tools, leather, glass, &c., to
less than 30 per cent ad valorem. The treaty was to be
binding for ten years, and to continue afterwards unless
denounced. This last event took place in 1872 after the
Franco-German war; but the treaty was temporarily
renewed, though finally abandoned in 1882.

The effect of the treaty on the commerce of the two
nations was most beneficial. Between 1858 and 1877
British exports to France increased from ;^'9,ooo,ooo to
;£'25, 000,000, and French exports to England from
;^i 3,000,000 to ;£^45, 000,000. A further good result
followed in the numerous other treaties to which the
French treaty gave rise, and in the extension of the
principle now adopted of the "most favoured nation",
by which negotiations ending in a compact between any
two nations may lead to an extension of like advantages
to other nations, and thus secure a step towards the
removal of obstacles to general free exchange over the
whole area of related countries.

The Economics of Foreign Trade. 95

Chapter V.
The Economics of Foreign Trade.

In the absence of artificial restrictions, such as tariffs,

j trade between nations will arise naturally when some

; advantage is to be derived from it by the nations engag-

/ ing in it, and will only continue so long as this exists.

Sir Dudley North more than two hundred years ago

stated this theory of foreign trade: "The whole world

as to trade is but as one nation or people, therein nations

are as persons. The loss of a trade with one nation is

not that only, separately considered, but so much of the

trade of the world rescinded or lost, for all is combined

together. There can be no trade unprofitable to the

public, for if any prove so men leave it ofi^, and whenever

the traders thrive, the public, of which they are a part,

thrive also."^

The advantages gained by home trade are obvious;
some parts of a country are fertile and good for agri-
culture, some yield clay or stone, others iron or coal.
To develop these resources and interchange the various
products of a country benefits all classes. Certain
localities are suitable for the manufacture of tools of iron,
and others for that of paper, cloth, or chemicals ; prox-
imity to water, coal, the nature of the soil, the humidity
or dryness, will determine the character of the local in-
dustries. The benefits arising from separation of employ-
ments and division of labour need no proof. The
principle of specialization of functions is admitted as a
sign of higher organization in plants and animals; it is
equally true of societies. By localization the special
advantages of situation are gained; by specialization
those of ability, capacity, aptitude, the gifts of nature
and the attributes of man are turned to best account,
utility is thereby increased, wealth is augmented, and
man rises to a higher civilization. It is only savages
who do not co-operate at all; they seek individually to

* Sir Dudley North, Discourses upon Trade, 1691.

96 The Free-trade Movement.

supply their own wants; their condition is very little
above that of the beasts ; they are non-progressive. By
contrast, the most advanced and richest nations exhibit
most fully the faculty of combination, and display the
highest differentiation in employments; the greatest
wealth and variety are to be found in the countries where
the application of the principles of subdivision and ex-
change is adopted; in other words, comfort and wealth
increase as men avail themselves of the circumstances
which promote the exchange of products and services.

The extension of trading to other countries is only an
application of the principle of division and co-operation
to a larger area. Cobden's saying, *' Free-trade widens
the circle of exchange", contains the whole doctrine,
and the possibility of economic advantage increases as
the area is widened. Nature's bounty has been scattered
lavishly, yet with many limitations; every diversity of
soil and climate is accompanied with diversity of gifts;
metals and minerals are distributed over different lands;
agricultural products exhibit an even greater partiality
in their distribution ; the successful cultivation of corn,
the vine, cotton, coffee, tea, oranges, currants, timber,
&c. , depends upon conditions of climate and land ; they
do not all flourish in the same country. The only way
then in which any one country can enjoy all these pro-
ducts is by foreign trade, i.e. by exchange of goods.
Each country may part with something it can produce
easily, and which costs it little, in exchange for other
articles which it could not otherwise obtain at all. This
merit of foreign trade was the first to commend itself to
early communities. Self-sustaining as regards their
necessaries, by trading they obtained comforts and
luxuries which their own country did not yield ; merchants
came with wares to the nomadic patriarchs in the desert;
the villagers in early England purchased their iron and
salt at the markets and fairs. The Venetian fleets
brought cotton goods, glass, fine leather, silks, and
many products of the East to be sold at the English
fairs; the strictest Mercantilists and Protectionists bought
gold and silver with English produce. By trading, all
obtained something which their own district did not yield.

The Economics of Foreign Trade. 97

But an additional advantage may be obtained by-
carrying specialization further, and buying abroad things
which can be produced at home, provided that the foreign
article is superior in quality or can be produced under
more favourable conditions. Two countries may yield
the same kinds of commodities, and yet there may be a
great gain by mutual trading, provided one nation has
some advantage by nature or skill over the other. Tlie
climate or soil of the one may be superior, the ability of
the inhabitants may be greater, or some circumstance
may favour the development of industry in special direc-
tions. In such a case it will benefit both nations if trade
is set up, the customer-country paying for the commodity
thus imported with some goods of its own production,
which the other country is willing to take in exchange ;
each in fact is customer to the other.

In this manner each country will devote most labour
to producing those things for which it is more specially
adapted, and the special aptitudes of the countries and
their inhabitants being thus utilized, a larger amount of
wealth is created, and both may share in the extra pro-
duce. The principle here briefly described is called in
economic writings the doctrine of '* comparative cost";
it is applicable alike to individuals, to localities, and to
countries; it is a form of specialization on the simple
principle that if each individual or country does by pre-
ference what each can do best, the general utility is
increased. Increase of utility (serviceableness) is the
object of work. Voluntary exchange is a process for
increasing utility. Men have many wants, and the desire
to satisfy new wants is capable of indefinite expansion.
Again, the more we have of anything, the less does an
addition to our stock of that article add to its utility. It
is therefore a gain in utility to part with a portion of that
which we have in abundance, in exchange for things of
which we cannot easily produce sufficient to satisfy our
wants. By this means our pleasure is augmented, and
the serviceableness of the goods is increased. Thus
** perfect freedom of exchange tends to the maximizing
of utility", to use the expression of Jevons; and since it
is its utility which causes a thing to be regarded as

(M460) G

98 The Free-trade Movement.

wealth, by free exchange wealth is increased. The
inability to see that utility is the criterion of wealth, and
that it is augmented by exchange, is a radical error of
some writers on socialism, which renders much of their
reasoning invalid. The same error underlies methods
of taxation which have for their object to prevent the free
flow of goods to those quarters where their ingress
would add to the total enjoyment of the world. ^

The increase of utility derived by specializing pro-
duction is regarded by economists as the greatest
advantage gained by trading, but protective tariffs
prevent this gain by checking the importation of goods
which a country can produce for itself though at greater
cost. Canada has a sparse population and a soil well
suited for the production of corn, fruit, and timber;
Great Britain has a dense population, vast capital sunk
in machinery, and with her minerals and industrial skill
she is specially adapted for manufacturing. If Canada
devotes herself by preference to agriculture, and Great
Britain to manufactures, by free interchange both
countries will be wealthier than if each endeavoured to
supply its entire wants in both departments of industry.
The gain is obtained by the reduced cost of production
arising from the utilization of natural forces. Of
course, under perfectly Free-trade some manufactures
will flourish in Canada and agriculture in Great Britain ;
national conditions alone will determine how far each is
profitable. The discovery of better sources of supply is
like the invention of a new machine, it is a means of
getting an increased amount of wealth from nature with
less labour; now the aim of every invention and dis-

1 No language can state this principle of the efficiency of exchange more
simply or forcibly than that of Adam Smith : " It is the maxim of every
prudent master of a family, never to attempt to make at home what it will
cost him more to make than to buy. The tailor does not attempt to make
his own shoes, but buys them of the shoemaker. The shoemaker does not
attempt to make his own clothes, but employs a tailor. The farmer attempts
to make neither the one nor the other, but employs these different artificers.
All of them find it for their interest to employ their whole industry in a way
in which they have some advantage over their neighbours, and to purchase
with a part of its produce, or, what is the same thing, with the price of a part
of it, whatever else they have occasion for. What is prudence in the con-
duct of every private family can scarce be folly in that of a great kingdom."
— ( Wealth of Nations, book iv. chap. 2).

The Economics of Foreign Trade. 99

covery is to cheapen and multiply products and con-
veniencies, thus foreign trade is in its results precisely
of the nature of a new discovery or invention.

It by no means follows that the production of the
article imported will cease altogether in the country
importing, it will only be checked at the point at which
it is more profitable to import. For example, corn can
be grown in Great Britain at a remunerative price on
the land best suited to corn, but it can be imported at
such a price as to make it unprofitable to grow corn on
inferior land. The trade of Australia with Europe
between 1851 and 1870 exactly illustrated the case of a
new discovery altering the course of industry, and by
the agency of foreign trade conferring benefits on both
sides. Prior to the gold discoveries Australia was an
agricultural colony, supplying its own food, and sending
wool, hides, &c., to Europe in exchange for clothing,
tools, and other manufactures. The discovery of gold
opened up a much more profitable industry to the
shepherds and agriculturalists, who went to the mines in
such numbers that Victoria not only ceased for a time
to export agricultural produce, but did not produce
sufficient food for its wants. Labour expended on gold-
digging would yield four or five times as much as it
could obtain if applied to agriculture, so Victoria ex-
ported gold to Europe and obtained thence butter, flour,
timber, and leather in exchange, though all these com-
modities could have been produced in Australia at much
lower prices than they could be imported. To produce
gold, however, was more profitable; and the trade, set
up naturally, continued until gold-mining became less
profitable, when the current was changed and agri-
culture again resumed its course. This has continued
until, at the present day, Australia is one of the largest
exporters of wool and meat, and can even send butter
to Great Britain at a lower price than British-made
butter. Other examples of trade directed to secure the
economic gain of exchange are abundant. Some of the
West India Isles send fruit to the United States in
exchange for meat and flour. Although they could
produce those necessaries cheaply themselves, yet they

loo The Free-trade Movement.

find their greater advantage in the production of fruits,
sugar, and coffee. The Channel Isles, in like manner,
could obtain corn from their very fertile soil (and in
1844 they exported wheat to Great Britain^), but it pays
them better now to grow early potatoes and fruit, such
as grapes and tomatoes, and with these to purchase
their corn in Great Britain.

Sufficient has been said to illustrate the nature of the
advantages described under the phrase ** comparative
cost" in works on economic theory. It amounts to a
statement that countries, like individuals, produce most
when, in comparing their powers and opportunities in
two or more fields of industry, they select for their
labour those in which they excel; and with the results
of their more efficient labour in those industries they
buy the commodities which they themselves are less
qualified to produce from countries which, in turn, have
some special fitness for the production of those com-
modities. The total yield is increased by this method
of organized production and exchange — there is an
addition to the wealth of the world. It is purely a
process of adopting the most efficient mode of pro-
duction in the circumstances.

One great aim of the opportunities for gaining know-
ledge offered by technical education and the scholarship
system is to enable youths to find the sphere in life for
which they are best fitted, and thus to increase the
national efficiency by employing those gifts and faculties
which they possess in any exceptional degree. It is held
that the individual advantage will be a national, and, it
might be added, an international advantage; for every
faculty utilized and developed, every form of latent
ability or force rightly directed, becomes a potential
increase of power to the world. If this argument be
valid, it is difficult to reconcile it with a policy which
places artificial limits to the enjoyment of the fruits of
such faculty or natural fertility at the boundaries of a
nation's territory. Does an economic advantage cease
at an accidental and even variable line on the earth's
surface? Does, for example, the transfer of Alsace and

* See Cobden's speech in the House of Commons, March 12, 1844.

The Economics of Foreign Trade. loi

Lorraine from France to Germany nullify the economic
gain of free-trading between those territories and
France?

It may be objected that a system of universal free
exchange tends to restrict the number of industries in a
country, and leads to over-specialization, making each
country dependent upon others for the majority of its
wants. To the first complaint it would be sufficient to
point out that in Great Britain, where free exchange
has been in operation for fifty years, there is probably a
larger variety of employments than in any other country,
and that, notwithstanding its manufacturing supremacy,
agriculture is still the largest single industry; it is also
the best-fed country in Europe, and the general standard
of comfort of the inhabitants is higher than that of most
countries which strive to promote many industries by
protective measures.

The great specialization of capital and labour presents
problems of real difficulty; it is, however, a product of
modern civilization, and is equally visible in the United
States, Germany, France, and other progressive countries
which impose high tariff's. Specialization is the out-
come of invention, steam-power, the joint-stock system,
the movement towards the organization of production
and distribution on a large scale, and it will continue
independently of all considerations of tariff's. Specializa-
tion of industry has recommendations far too valuable to
allow it to be set aside; its danger lies in the readiness
with which trade and industry conducted on a vast scale
can be deranged. A whole district like South Lancashire
may be thrown into idleness by an event such as the
civil war in the United States; a strike of dock-labourers
or coal-miners may almost paralyse the trade of a nation.
These are dangers which arise with the complexity and
interdependence of industries, though they originate in
moral, political, and social causes, and in the imperfect
knowledge of economic laws ; the remedies lie, however,
in the direction of removing the causes of wars and
strikes and other interruptions to industry, and along
with these remedies should be classed the reduction or
abolition of tariff's.

I02 The Free-trade Movement.

The adaptation of demand to supply on so vast and
complex a system as trade has now become, presents
many difficulties and risks. Disturbances, crises, and
depressions in one part of the world produce effects in
remote reg^ions : a famine in India, a convulsion in Aus-
tralia or Japan, a war between two customer countries,
gives a shock to the industries and commerce of England.
This is inevitable, but it entails less suffering than did
the local failure of crops in times when Great Britain
was self-sufficing; and the evil will be much diminished
when the economic causes of commercial and industrial
depression are more widely understood, and when na-
tions are more disposed to settle their differences by
arbitration. But the extension of the area of trading-
relations has many advantages to set against this liability
to disturbance: larger and more numerous sources of
supply render scarcity less probable, a contraction in
one direction is generally met by compensation from
some other quarter, there is a levelling and steadying
tendency. In the same manner, a wide and extended
area of demand means many markets, and these offer
some resistance to disturbing influences, as it is less
probable that a large number would fail at one time,
and a narrowing in one direction is often balanced by
an expansion in another. Add to these the improved
means of communication, diffusion of information and
quickness of transit, attained by aid of the same huge
forces which have rendered large organization possible,
and we find, that on the whole, balancing advantages
and disadvantages, the tendency to large markets, com-
plicated trading, and the specialized production which
free-trading fosters, is a great benefit to mankind.

The system of complex exchange, free enterprise, and
natural trading often leads to the creation of industries
in parts of the world where civilization had not previously
penetrated; indeed commerce is the greatest civilizing
power — it finds out new markets, discovers fresh sources
of supply, opens up savage countries, and plants colonies
in desolate places to develop products which science
has found useful to man; free exchange develops the
mechanism which carries to these places the con-

The Economics of Foreign Trade. 103

veniences of the most advanced countries. The nitrate
deposits of Chili and the petroleum wells of Baku, the
gold-mines of Australia and the Transvaal, have drawn
large populations to districts previously almost un-
occupied ; by the aid of commerce the various wants of
these populations are able to be satisfied from the
fruits of their specialized industries as easily as those
of the coal-miners of Wales or the^ cotton-spinners of
Lancashire.

There are many natural impediments to trading which
are opposed to excessive specialization and the complete
appropriation of industries by any country. While there
is great disparity in productiveness, yet most countries
can produce many things more conveniently than they
can import them. Because two countries can produce
the same article it does not follow that trade in that
commodity will arise whenever one of them has a
natural advantage for its production; cost of carriage
will always form a kind of natural protection ; distance,
mountains, and seas impose obstacles; differences in
language, in currency, in manners, and in thought
check direct trading; habit and connections tend to keep
trade in local channels; while some causes are expand-
ing trade others interpose barriers, with the effect that a
large number of industries will always of necessity be
local, or have a limited market.

It is sometimes asserted that by permitting complete
freedom in commerce a country may be undersold in all
its industries. This is, however, an impossibility, since
it would imply importing without exporting; but trade
is exchange, the nation that buys must sell, the one
fact is the correlative of the other. A nation with
nothing to offer cannot buy, and if foreign goods come
into a country some other articles must go out in ex-
change. If goods ''made in Germany" are plentiful in
Great Britain, goods **made in Great Britain, or pur-
chased with British goods elsewhere ", will correspond
to them in Germany; in other words, each nation pays
for its imports directly or indirectly with its own pro-
duce. Trade depends upon a double demand, each
country's exports are supply to others, while to it they

104 The Free-trade Movement.

are demand for the goods it seeks in exchange. It does
not follow that the trade of Great Britain will balance
with each country separately. Much trade is circuitous,
and the settlement indirect. If Great Britain buys from
the United States, the United States from India, and
India from Great Britain, their respective debts may be
set off against one another ; the fact is, that the whole of
a nation's imports are purchased by the whole of its
exports, and not that its accounts with each country are
separately balanced. Here comes in the service of
money, and also the function of bills of exchange, which
are part of the machinery of trade. Some persons
imagine that in foreign trade goods are purchased with
money, i.e. with gold; in the first place, this is not
possible, since the gold does not exist in sufficient
quantity to transact all exchanges, and if it were pos-
sible to obtain the gold the inconvenience and waste of
power would prohibit the attempt. The whole of the
gold currency in Great Britain would not provide for
one-seventh of its foreign trade alone (;£'745, 000,000 for
the year 1897), if we disregard entirely the home trade,
which is many times greater and much more directly
dependent upon the use of metallic money.

As the United Kingdom does not produce the precious
metals, the gold and silver which it employs are im-
ported commodities. The total amount of gold which
entered this country in 1895 for all purposes was
;^36,ooo,ooo, and about ;£'2 1,300, 000 was exported; of
silver about ;£" 1 2,600,000 was imported, and ;^io, 300,000
was exported during the year. Gold comes plentifully
to Great Britain because of its wealth, its free-trading
and vast commerce, and its free market for gold.^
During the fifteen years ending 1895 the import of gold
and silver exceeded the export by ^77,000,000.2 Since

^ By the Coinage Act (1870) the British Government undertakes to coin
freely and gratuitously unlimited gold, at the rate of ;^3, 17J. xoVid. peroz.
of standard gold, which is called the mint price. The gold is purchased
by the Bank of England, which acts as agent for the mint, charging x%d.
per oz. for its trouble. This unlimited free coinage constitutes a free market
for gold such as does not exist in any other country.

' This flow of gold and silver to and from the United Kingdom is suf-
ficiently illustrated by the statistics for five years : —

The Economics of Foreign Trade. 105

Great Britain receives much more of the precious metals
than she parts with, it is manifest that she is not paying
for her imports with money, but with goods, in fact
she buys her gold with her merchandise. Trading is
done in terms of money, that is, in price; gold is the
measure and standard, but its transport is avoided as
much as possible. And as in the internal trade of the
country cheques and bills are estimated to perform some
95 per cent of the exchanges of the nation, so in foreign
commerce exchanges are effected by means of bills. The
operations are refined and technical; the result is that
debts for goods are balanced against one another
through the agency of credit documents representing
money, and by the aid of the machinery of banking.
Thus the foreign trade of the world is carried on with
comparatively little metallic currency ; goods are bought
with goods, imports with exports, balances only being
paid in gold.

Since imports are purchased with exports it might be
expected that their values would balance one another,
and as far as trading alone is concerned this is the case,
but international relations are very numerous and com-
plex, and involve many operations besides those of
commerce, which give rise to indebtedness. Great
Britain is a maritime country, with a large mercantile
fleet doing a considerable carrying trade for other
nations all over the globe. About one-half the ocean
commerce of the world is done in British vessels. This
carrying trade creates an element of indebtedness, which

1891.
1892.
1893.
1894.
1895.

Gold.

Imports.
30,275,620
21,583,232
24,834,727
27.572.347
36.005,999

Exports.
24,167,925
14,832,122
19,502,273

15.647.551
21,369,323

Imports.

9.215.598

10,746,382

".913.395
11,005,417
12,669,662

Silver.

Exports.
13,060,866
14,078,568

13.589.745
12,165,049
10.357.436

1891.
1892.
1893.
1894.
1895.

1891.
1892.
1893.
1894.
1895.

Total.

Imports.
39,591.218
32,329,614
36,748, 122

38,577.764
46,675,661

Exports.
37,228,791.
28,910,699.
33,092,018.
27,812,600.
31,726,759.

io6 The Free-trade Movement.

is discharged by the debtor-nations in produce. As an
example, suppose a British vessel to carry out ;£"iooo
worth of coal to San Francisco and fetch back corn.
Let the freight each way be ;£^5oo. The export of coal
from Great Britain will be set down at ;^iooo, on
arrival in America the value, enhanced by cost of car-
riage, will be ;^i5oo, and in addition another ;£^5oo
must be sent to Great Britain to pay the return freight ;
thus ;^20oo of corn will be entered as imports, of which
;^iooo will come in payment for British coal and ;£'iooo
will be due for services rendered by British shipping.
The additional imports are the earnings of a British
industry, the exports do not include the cost of car-
riage, while the imports, which must include the goods
sent to pay for carriage, will necessarily exceed the
exports by that amount. The imports received in return
for services of British vessels are estimated at about
;£"6o,ooo,ooo per annum; this service has been signifi-
cantly named by Sir Robert Giffen ** invisible exports".
Not only in foreign trade, but in the ordinary affairs of
life, a large part of what is paid for is ** service"; but,
having none of the attributes of matter to obtrude itself
upon the senses, service is apt to be forgotten, and to
be overlooked as a factor in exchange, and especially is
this the case in comparing values of imports and exports.

Another chief source of the discrepancy between im-
ports and exports arises from the practice of investing
capital in foreign enterprises. British subjects have
lent to foreign countries vast sums, the interest on which
is estimated at about ;£" 100,000,000 a year. It is pro-
bable that half that amount is reinvested abroad annually;
the balance, about ;^5o,ooo,ooo, comes in the form of
imports, for which no corresponding export is required.

It has been maintained that this mass of imports for
interest, while it benefits the investor who receives its
value, is a loss to British working-men by competing
with their products. The facts are, however, exactly the
reverse ; at every stage the labourer has shared in the
employment and profit afforded by the foreign transac-
tion. The original loans were made in the form of goods,
such as railway iron, engines, machinery, clothing, &c.,

The Economics of Foreign Trade. 107

all manufactured by British capital and labour, and they
were exported in vessels built with British capital and
labour. The interest in the form of imports comes home
in ships also constructed with British labour; and since
these imports consist chiefly of food and material for
our industries/ they are also beneficial to the working-
classes. The imported food provides cheap necessaries,
and augments thereby the real wages of labour, while
the raw materials become the means of future employ-
ment in the manufacture of goods either for home con-
sumption or for re-exportation; in the latter case they
again employ the labour of those directly or indirectly
engaged in the shipping industry. Since there is no
scarcity of capital at home, the overflow, sent out as
loans in the form of manufactured goods to develop
other countries, is wholly an addition to the producing
power of the world, and a source of employment, income,
and profit to the British nation ; it is not a displacement
of labour, but an addition to industry, and the means of
enjoyment which it procures. The right conclusion is
that the foreign trade and relations which arise naturally
under free competition tend to add to the wealth of a
country, and cause industry and capital to flow into the
channels which are most lucrative.

Besides the two instances here given, many other
relations give rise to indebtedness between countries;
such are foreign travel, tribute, remittances of tempor-
ary residents, expenses of soldiers and sailors on foreign
stations, of colonial government officials, &c. All the
debts which arise out of these transactions, though
expressed in terms of money, ultimately tell upon im-
ports and exports. Nations do not waste unnecessary
power in sending gold and silver to and fro ; goods are
the real things remitted, exchanged, and consumed in
the long run. These various business relations, how-
ever, render the balance-sheet more complex, and
obscure the simple truth that imported goods and services
are paid for by exported goods and services through the
instrumentality of credit documents, and that the pre-

1 Of British imports about 70 f)er cent consist of food and materials for
manufactures.

io8 The Free-trade Movement.

cious metals, though the basis and measure of value,
play a relatively small part in the actual exchange.

An objection of a different kind may here be con-
sidered : it is charged against free-trading that it is in
the interests of consumers only, and that producers are
left to take care of themselves. The more correct state-
ment, however, would be that it leaves both classes
absolutely free to pursue their own interests by buying
or selling how and where they choose ; it deals out equal
measure. Every man is at liberty to produce what he
can, and the test of his fitness in the circumstances will
be that the community will buy his article in preference
to those of other competitors; if its quality and price
are such as warrant its success, it will be for the good of
the community; if the foreign article is preferred, the
principle of comparative cost will show that its produc-
tion at home would be an economic loss to the community.
Again, if any class might claim special consideration, it
would be the consumers, who are the more numerous
body, seeing they comprise all, and their interests should
considerably outnumber those of any group of producers
who desire to foster their industry at the expense of the
community; but a system which leaves both classes
absolutely free cannot be said to favour either.

In a country where Free -trade has already been
adopted, and matters are adjusted to its working, to
set up Protection would be a method of imposing an
unfruitful tax upon consumers; and where equal free-
dom prevails already no economic ground can be
advanced for imposing such a useless burden. The
same reasoning applies, only in a less degree, to the
proposal to increase a tariff in a country where some
degree of Protection exists; this is the case of the
United States' tariff (1897), which has considerably in-
creased many duties. But to remove a duty in a
protective country is a much more difficult task, as the
producers of the article will have acquired the right of
a vested interest, and can represent that they committed
their labour and capital to their industry with faith in
the continuance of a system deliberately adopted and
authorized by law. This is a chief difficulty in the way

The Economics of Foreign Trade. 109

of tariff-reform, and one of the reasons why a country
once committed to a protective policy continues to up-
hold that policy in spite of the great burden which it
inflicts upon the consumers. When protection has been
adopted for the purpose of starting certain manufactures,
a large number of persons in the trades concerned would
sufiFer immediate loss of employment and of capital by'
the sudden removal of the duties, under the shelter of
which the industries were built up such persons are
naturally vigorous in their efforts to maintain the duties,
and they would have some real cause for complaint if,
without compensation, they were sacrificed to a change
of policy. So impressed with the strength of vested
interests was Adam Smith that he doubted whether
Free-trade would ever be adopted in Great Britain.

The old theory of trade favoured exporting, and aimed
at procuring markets; the obstacles to importation led
to bounties and other expedients for finding a sale. It
is important that a country should be able to dispose of
the things which it can most profitably produce ; under
mercantilism the notion that gold was the most desirable
import restricted trading, for there was a limited amount
of gold to be procured, and the impediments placed upon
other imports did not assist exporting. The fact is, that
since importing and exporting are complementary opera-
tions, they mutually assist one another, and free imports
stimulate exports. Buying implies selling. A country
which is open to easy purchasing is more able to dispose
of her own produce, for, since she must pay for her
purchases, the countries which sell to her will be more
disposed to look in her markets for the goods they are
willing to import, and if such a country can offer de-
sirable exports they will be more easily accepted. Also,
vessels bringing goods to a country which offers a free
market will endeavour not to return empty, and will
stimulate exporting from such a country by off"ering low
freights. Thus it comes that importing determines ex-
porting, by making it more easy to find markets; it is
perfectly true that exporting implies importing, for the
exporter will require payment in some form; but it is
the importer who takes the initiative, and who makes

no The Free-trade Movement.

/
/ the market in the first place by his willingness to accept

~~^he goods. It would be useless to send goods to a
/country which would not, or could not, purchase them.

/ Suppose China to determine upon a policy of railway

/ development, and to send a large order to Great Britain
for steel rails and steam-engines ; the export of iron from
Great Britain would lead to an import of produce from
China or some country on which she gave us bills ; but
the prime fact in the whole proceeding would be, not
exporting from Great Britain, but importing by China.
China, desiring iron goods, would import them from Great
Britain, and must be able to pay for them with exports
of some kind. The transaction therefore would have its
origin in China's desire for imports. It is an elementary
economic truth that wants create desires, and these
stimulate men to labour for their satisfaction ; the funda-
mental fact is in the wants; and a country which, to
satisfy her wants, is willing to import freely, will thus not
only increase her imports, but her opportunities for ex-
porting, as a means of paying for them, will be equally
augmented. The converse mode of stating the same
truth would be that a country which declines imports
altogether would sell nothing abroad; every step to-
wards prohibition is a step towards abolishing her
export trade. The smoothest method of securing
markets abroad for home goods is consistent therefore
with a policy which offers the freest market to foreign
goods for which they may be exchanged.

Chapter VI.

Arguments for Protection, Reciprocity,
Bounties, &c.

Regarded historically and in its origin. Protection is
not the outcome of a deliberate policy, adopted after
careful weighing of economic arguments. It grew out
of the restrictions incidental to early forms of society, and

Arguments for Protection, &c. m

the restraints upon individuals inevitable in the unsettled
conditions existing long prior to the modern industrial
era; the jealousy of states during the period of their
formation and consolidation, the growth of the sentiment
of nationality, the need for resources (treasure) to carry
on war, and the creation, by means of tariffs, of classes
interested in the maintenance of restraints upon com-
merce, all helped to develop it. Facts came before
theory, and the principle of Protection as a beneficent
institution was formulated to explain and support the
customs and practices which had grown up. Until
late in the eighteenth century Protection was scarcely
questioned as a guiding principle of statesmen; objec-
tions were raised to special restraints on commerce, or
on freedom of individual action, rather than to the general
principle. The belief that it furthered the material in-
terests of communities sustained the Protective doctrine
until Adam Smith changed the stand-point by maintain-
ing that the enlightened pursuit of individual interests
harmonized with the national well-being.

In modern times the defence of Protection is under-
taken either upon economic, or, more broadly, upon
political grounds. Protection is advocated either as
promoting some existing branch of national industry
and so securing employment for labourers; or as foster-
ing some new trade which is expected ultimately to be a
source of wealth, although it may involve a temporary
loss to consumers and tax-payers; or it is demanded
upon patriotic grounds as necessary to make the nation
independent of foreigners, that it may be self-supporting
in the event of war. Both lines of defence are open to
the charge that they are based upon imperfect observa-
tion of the whole of the circumstances, and that the
conclusions deduced are consequently fallacious. In ex-
amining more at length some of the current arguments
for Protection, we shall find that they do not form a
harmonious system, that some of them contradict others,
and that nobody can consistently uphold them all. For
example, it is urged that a protective tariff will support
the home industry by excluding the foreign article and
yet raise revenue; that it will keep up prices and yet

112 The Free-trade Movement.

benefit the labouring classes, whose real wages it would
by that means reduce; that it will prevent fluctuations
in trade and prices, by excluding foreign competition,
although it thereby creates a monopoly which is a fre-
quent cause of fluctuations and high prices ; that while
it is desirable to encourage invention in the interests of
cheapness, it is also beneficial to keep up prices by
tariff's. These and other paradoxes appear on a survey
of the diff"erent arguments in favour of Protection.
They arise by confining the observation to some limited
portion of the industrial field, and identifying its pros-
perity with the national interest, while other effects are
overlooked. Thus it comes about that a partial or
temporary effect is mistaken for the whole, and it is not
seen that a benefit in one direction is more than counter-
balanced by a greater loss in another direction, flowing
from the same cause.

Protection is said to encourage home industry by pro-
viding work for our own labourers in preference to
foreigners, and it is therefore claimed to be a patriotic
policy. This statement, however, overlooks the fact
that imports are paid for with exports, and that there-
fore no goods can be imported unless home industries
are first employed to produce other goods with which to
purchase them. A country with nothing to sell cannot
buy. It must employ its labour therefore in producing
the wherewithal to purchase foreign commodities, and if
that labour be diverted to producing those commodities
at home, it will cease to be employed in producing the
other articles which were exported in exchange for them.
Now where there is no artificial direction, and trade is
free, the industries which are most profitable in natural
conditions will be those adopted; but the general effect
of duties imposed for the purpose of regulating trade
will be to direct the labour and capital from more pro-
ductive to less productive industries. Labour and
capital being then less efficiently employed, the country
will suffer loss.

To take an extreme case as an example: if Great
Britain were to insist by means of prohibitive tariffs on
making her people grow all their own corn, much labour

Arguments for Protection, &c. 113

would be diverted to agriculture, and vast portions of
inferior land would need to be cultivated. Since all im-
ports of corn would now cease, the exports of cloth,
machinery, &c. , by which they are at present purchased,
would cease also, and the industries which supply them
would decline; the mercantile marine, which conducts
the trade, would be unemployed, shipbuilding and other
subsidiary industries, so far as they depend upon this
branch of commerce, would collapse, and a vast army of
unemployed artisans, now receiving high wages, would
be driven to agriculture to provide a bare subsistence
from a niggardly soil, or, what is more probable, they
would leave the country in search of a better livelihood.
The effect upon home industry would thus be disastrous.

The principle, as illustrated in the extreme case of
prohibition, is equally valid when the attempt to protect
agriculture is less complete; and the results would be
proportionally hurtful in whatever degree Protection
were applied to any other industry. The effect of a pro-
hibitive duty is to divert industry from a more profitable
to a less profitable channel ; it creates no new capital, and
does not add to production ; but it displaces both capital
and labour, and it tends therefore, not to increase em-
ployment, but rather to diminish employment. The
contention that home trade is more profitable than
foreign trade, because it employs the capital and labour (
of both industries at home, is answered by means of the \
above reasoning. Home trade is more profitable only
when it grows up and goes on naturally, without forcing.
But where capital and labour are directed to some
special home trade by means of Protection, and an in-
dustry is fostered on which there would otherwise be
loss, that is, where the article could be imported more
cheaply, no economic benefit can accrue. If the cir-
cumstances of the country are such that it is cheaper to
import than to produce a given article, labour and
capital should be permitted to find their way to the pro-
duction of other goods by means of which the desired
import may be purchased.

Not infrequently protective duties are advocated as a
source of revenue. Protection and revenue are, however,

(M460) H

114 '^hc Free-trade Movement.

incompatible aims,^ since, in so far as Protection is suc-
cessful, foreign articles are excluded and no revenue is
obtained; whereas, if the articles are imported (paying
duty), to that extent Protection is not secured. But if any
revenue is raised the duty is not truly protective, since it
has obviously failed to prevent the goods paying revenue
from entering the country. Protection and revenue
cannot by the same measure both be secured success-
fully. The fallacy arises in two ways: (a) from confusing
protective duties with other indirect taxes levied on
imports, such as Great Britain places upon tea, wines,
tobacco, &c., but these duties are not protective, they
foster no home industry, their object is revenue; and
(b) because many protective duties are imposed which
fail to give complete protection; some goods are im-
ported under duties not sufficiently high to exclude them
altogether, and then only part of the supply is produced
at home. The cost to the consumer is increased on the
whole of the supply — on the imported portion by the
amount of the duty, on the home-made portion by the
excess of the cost of production over the price at which
the article could have been imported duty free; some
revenue is raised from the imported portion, but none
from the home-made portion; the former is not excluded
by Protection, the latter raises no revenue; such a duty
cannot properly be described as either a protective or a
revenue duty, since it accomplishes neither satisfactorily.
In young countries indirect taxation levied upon im-
ports is generally the most convenient mode of collect-
ing revenue, since the population is spread over wide
and sparsely-settled areas. In such cases duties levied
on many articles, at first for convenience, tend after-
wards to become partially protective; that is, industries
are commenced in the colony under the shadow of a
duty which raises the price of the imported article, and
they then supply in part some article which is still also
imported subject to the duty. At length the protected
industry may grow powerful enough to secure an in-

* "Taxes imposed with a view to prevent or even to diminish importation
are evidently as destructive of the revenue of the customs as of the freedom
of trade." — ( Wealth of Nations, iv. a.)

Arguments for Protection, &c. 115

crease in the tariff sufficient to exclude the article alto-
gether Such a duty is prohibitive'^ but it is obvious that
a duty may be so high as to check importation, and yet
not high enough to prevent it altogether, i.e. it may be
partially protective, or protect up to a certain level. In
all protective countries many duties imposed are only
partially effective, some, but not all the foreign articles
being excluded. The effect is to raise the price of the
article (whether produced at home or abroad) to the
level of the cost of production of the imported article
plus the duty. The tax is obtained only from the im-
ported goods; on those produced in the country no
duty accrues to the exchequer, but the consumer suffers
an economic loss as great as if the duty had been levied
on the total product.

Much of the popularity gained by protective proposals
seems to be founded upon the prejudice that foreign
trade on the side of imports is injurious, and an act of a
hostile character initiated by a rival. If this view were
correct, what should be said of the export of British
goods to other countries? The fallacy survives in many
current expressions. ' ' Foreign goods flood our country " ;
"Great Britain is the dumping-ground for foreign pro-
duce"; *'An invasion of foreign commodities", are a
few of these question-begging phrases. Behind these
and similar phrases there lurks the belief that the en-
trance of foreign products into a country resembles the
descent of a foreign foe upon its shores. The false
analogy helps to maintain the belief, but the twofold
aspect of trade as exchange is forgotten. Trade which
arises spontaneously is mutually advantageous; both
parties may be presumed to be studying their interests.
Imports are demanded to satisfy wants, and, as already
shown, they must be paid for by the produce of the im-
porting country. No nation will continue the process
of exchange unless it is beneficial; foreign goods will
not be sold in Great Britain unless they have something
to recommend them to British consumers, nor unless
British producers can export commodities to pay for
them. If foreign goods '* invade" our shores, British
goods must in return '' invade" foreign territory. Gain

ii6 The Free-trade Movement.

must result to both parties from these peaceful inva-
sions, or the exchange will not be continued.

It has been urged as another argument in favour of
protective duties, more particularly in the United States
and Australia, that such duties are a means of keeping
up wages by excluding the products of what has been
called the ** pauper labour" of other countries. To this
it may be replied, that if money-wages are kept up by
this means so also are prices, and the cost of living is
proportionally greater; so that real-wages (the commo-
dities and comforts earned by a given amount of labour
of the same kind) are not higher. Moreover, experience
shows that the standard of living in free-trading Britain
is not inferior to that of protective countries, but, on
the contrary, distinctly higher than that of most such
countries. Comparison of real-wages is very difficult,
so many elements enter in, and the conditions of labour
and of life are so different as regards hours, severity,
cost of food and clothing, rent, means of health and
rational enjoyment, &c. In young countries the demand
for unskilled labour is plentiful, and such labour gets a
high reward; but the skilled artisan living in towns, and
paying high rents, does not find the same advantage.^
Observation has yielded the empirical law, now generally
accepted as an economic truth, that the best-paid labour
is usually the most efficient, and that low prices may
consequently co-exist with high real-wages. The United
States tariff is directed principally against British manu-
factures, and yet it cannot be denied that British labour
ranks with the best-paid labour in the world; while the
high purchasing power of wages is, in no slight degree,
owing to our system of free imports, that cheapens the
commodities on which a considerable part of the wages
of labour must be expended. Protective duties cannot

^Mr. Wise writes (Industrial Freedom, p. 306): "Personal inquiries from
both masters and men have satisfied the writer that the highest grades of
the class are less well paid, even in money wages, in Australia than they are
in England; " and again (p. 215), " It is no uncommon thing to find among
the passengers of homeward-bound steamers skilled English artisans who
are returning to England because they cannot make the high wages that
they used to earn in any part of Australia — not even in Protectionist Vic-
toria".

Arguments for Protection, &c. 117

therefore be advocated as being levied in the interests
of the real-wages of skilled labour.

Sometimes it is suggested in support of a proposed
tariff, that, if adopted, the foreign exporter will pay the
duty. It has been argued, for example, that a duty of
5^. a quarter levied upon imported corn would be paid
by the exporting country. From the Protectionist point
of view this should have nothing to recommend it; for
if the duty were paid, and the foreign article admitted,
it could afford no protection to the home industry; such
a duty becomes a revenue duty and not a protective
duty. But the competition of many countries, and of
many farmers in corn -producing countries, has long
been effective in reducing prices and freights to a very
low level, and this far-reaching competition tends to
keep prices at a minimum, which leaves the sellers no
adequate margin of profit out of which to pay any levy
in the form of an import duty. In such circumstances
a duty must raise prices, and will ultimately be paid by
consumers either in the higher price of the foreign corn,
or, if that be excluded entirely, in the increased cost of
the home-grown corn which would take its place. It
would become in any case a tax upon one of the neces-
saries of life, which is one of the worst forms of taxation.
No one doubts that the import duties upon tea and
tobacco are paid by the consumers of those articles;
otherwise the demand for a remission of the tea-duty in
the interests of the poorer classes is meaningless. Nor
will it be maintained that the British manufacturers pay
the high duties upon their goods sent to the United
States or to Russia, which are in some cases nearly
equal to the cost of the product; such duties are ulti-
mately paid by the consumers in those countries. The
fact that such goods are imported and are sold, proves
that, though thus taxed, they are nevertheless preferred
to the home-made articles, owing either to some excel-
lence of quality or style which is wanting in the home
products, or to the fact that, with the duty, they are
as cheap as the home-made article.

It has been urged as a reason for imposing retaliatory
duties, that manufacturers in certain countries are en-

ri8 The Free-trade Movement.

abled by their protective tariffs to make so much profit
on their home business as to permit them to send goods
to Great Britain, which can there be offered at prices so
low as to undersell British goods. No doubt in many
trades there is occasional over-production, and surplus
goods, unsaleable at home, are then shipped off to find
a market in other countries at any price. But manu-
facturers making a large profit at home are scarcely to
be credited with organizing their industries so as to
secure a permanent loss by steady over-production.
The passion for underselling will not lead to a regular
business of an utterly unprofitable character. Also, an
industry protected by a prohibitive tariff, and making
profits so much above the average rate as the contention
assumes, would soon create competition in its own
country, which would lower profits. The export trade,
however, would be impossible on other and more con-
vincing grounds ; for if a protective duty is required to
enable the producers to force the sale of the native pro-
duct in their own countrj', it is obvious that the com-
petitor-country, against which the duty is levied, can
produce more cheaply. How then can they compete
successfully in a country that could undersell them m
their own 7narket if they were not sheltered by a tariff?

There can be little doubt that, as a general rule, the
consumer of taxed goods pays the duty. An import
duty may in some instances be shifted to the producing
country. If the article be a luxury, such as champagne,
which the consumer can discontinue, and he is already
paying the highest utility price, a fall in the demand
would be occasioned by the imposition of a higher duty.
The seller might then be induced to forego part of his
profit, and pay the tax by reducing the price rather than
lose his market. This happens in the case of any taxed
monopoly, where the monopolist has been charging the
highest price he can secure. Whether the duty can be
shifted from the importer to the exporter depends upon
the effect of the duty upon the demand, and also upon
the conditions of production in the country of supply.
It is also possible that part of an import duty may be
borne by a country which is compelled to find its market

Arguments for Protection, &c. iiq

in the taxing country ; but this is not a common case.
Further, such a country would soon learn the lesson, and
impose retaliatory duties upon the goods sent in pay-
ment. The effect of the struggle between the two
countries to extract duties from each other would be,
that each would be paying higher prices, together with
the added cost of the machinery of collection. No real
economic advantage would ensue to either. The inci-
dence of taxation is sometimes very difficult to trace
with absolute certainty, but it seems clear that duties
on ordinary imports fall upon the countries imposing
them. If such duties are of a protective nature, and
are fixed high enough, they will exclude the foreign
article entirely, and if the duties protect in any degree,
they so far exclude the foreign article, and the consumer
pays a higher price to cover the increased cost of pro-
ducing the article in his own country.

It is very necessary to discriminate between the com-
petition of nations in a neutral market and the mutual
commercial intercourse of two nations; for the former
is rivalry while the latter is not. In the former case
each seeks to secure the advantage of extending its
trade to a new area; each endeavours to sell its own
goods for the products of the new country. The suc-
cessful competitor will enlarge its trade at the expense
of its rival. The competition of Great Britain and Ger-
many, for example, in a neutral field like South America
or China, is of this nature, and the country which gains
the trade will expand its own industries thereby, and in
exchange will secure fresh products for itself. The
mutual trade relations of Great Britain and Germany,
however, are not of this nature ; it is not a condition of
advantage to Great Britain that Germany should lose.
They exchange the comparatively superfluous for the
relatively desirable, thus satisfying one another's wants
and increasing the total of utilities ; each is an importer,
each an exporter, and both derive advantage. The
interchange of produce results in greater concentration
upon special industries in the two countries, of much the
same kind as that which determines most of the woollen
trade to Yorkshire and the cotton trade to Lancashire ;

I20 The Free-trade Movement.

but as there is no hostility in the trade relations of
Yorkshire and Lancashire, so neither can trade between
two nations, which consists in the mutual supply of con-
veniences, be properly described as hostile, or as other
than beneficial.

A belief that nations trading" with one another are
eng-aged in a kind of warfare evidently lies at the root
of the desire for ** retaliation", which distinctly suggests
the notion of paying back ** blow for blow". The belief
finds expression in various forms: "They strike us with
their tariffs, let us retaliate"; ** We have thrown away
our weapons, and in this warfare we have no guns with
which to fight in the commercial struggle of nations";
and, "We have lost our power to bargain for a reduction
of tariffs, we have nothing to offer" ; and again, "Others
take advantage of our Free-trading policy and give us
nothing in return". Lurking behind all such expressions
stands the assumption that trading, so far as the pur-
chaser is concerned, is a mistake; that its object is to
get rid of products, not to obtain them. The fact that
the maximum advantage is sought on the easiest terms,
which is the prominent feature in individual trading
transactions, is ignored when the matter comes to be
regarded from a national point of view and in the gross.
The object of international, as of individual exchanges,
is to obtain the commodities we need, and the goods we
part with are merely instruments for gaining as much
as possible of those we desire. Now free importation
conduces to this end, and its non-adoption by other
nations does not preclude Great Britain from gaining
its benefits. Great Britain gains by allowing foreign
goods to enter without impediment, whether other
nations copy her example or not. So long as Great
Britain receives in return for her exports a quantity of
desirable imports sufficient to cover the cost of produc-
tion of her exports, she is a gainer by the trade, since
she thus gets goods she requires at less cost than she
could produce them herself, and, in fact, she gains much
more than this, for she makes profit by trading, and
carries on a lucrative business as shipper for both
parties. Foreign tariffs may curtail her advantage but

Arguments for Protection, &c. 121

cannot destroy it, for if loss occurred trade would
cease.

Extreme advocates of reciprocity and so-called Fair-
trade ask that we shall only trade with those countries
which will accept reciprocal terms, and that we shall
punish those who decline by excluding their goods.
But while we may regret the methods of other countries,
which injure us to some extent by limiting the total
trade carried on, we shall not convert them to our views
by adopting their methods, and shall only injure our-
selves still further by refusing to continue commercial
relations which we find profitable even under present
conditions. Those who object to the British system of
Free-trade as "one-sided Free-trade" fail to recognize
the advantages it confers upon both consumers of im-
ports and producers of exports, and are still under the
influence of the doctrine which regarded exporting as
more profitable than importing, or of that other fallacy
which seems to assume that exporting without importing
is either possible or desirable.

That we have parted with our means of bargaining
for the remission of duties is a matter of little account,
when we set against possible petty gains from mutual
reduction of duties the enormous advantage of fifty
years of free imports, as manifested in the prosperity
of the country and in our high standard of living. Com-
mercial treaties and diplomacy are indifferent substitutes
for the higher advantages of complete freedom ; they are
but tentative measures, useful in mitigating the evils of
restriction; but which, while securing only partial re-
missions, are liable to produce mischief or loss in other
directions, owing to the jealousy they excite by the
diversion of trade. Such treaties may be expedient in
dealing with the countries whence we obtain our imports
for revenue — wine and spirits, tobacco, tea, &c. The
French treaty of i860, negotiated by Cobden, in which
Great Britain lowered the duties on French wines and
brandy in return for relaxation of duties on English
manufactures, proved that in becoming Free-traders we
had not entirely parted with our power of gaining con-
cessions by treaties; the lapse of the treaty and re-

122 The Free-trade Movement.

version by France to a more protective rigime shows
equally the want of permanence in such arrangements ;
but the higgling for small concessions which treaties
involve, with all the troublesome details of tariffs, and
the expense attending administration, would be super-
seded by the simpler system of general Free-trade with
its larger economic advantages.

All consumers, as such, prefer Free-trade, because they
know that, to buyers, open competition secures the best
article ; but men are apt to become Protectionists when
their view is confined to their own sales. It is then
that they desire to monopolize the market for their own
special profit and not for the good of the nation. The
late Mr. Villiers, in his reply to the address presented
to him in June, 1896, on the completion of fifty years of
Free-trading, summed up the position in a single
sentence: *'The land-owner, the ship-owner, the West
Indian merchant, all approve of Free-trade in what they
consume, but in the sources of their income and profit
there are no more staunch supporters of prohibitive law ;
they are always reasoning as if the country were made
for them and not they for the country; and in their
ignorance they are ev^er blind to the fact that while they
seek to profit by the losses of others they are again
injured by a like injustice ".

But retaliation in our case is a vain and futile hope.
Great Britain cannot afford to retaliate by taxing food
and the raw materials of her industries, which constitute
quite 70 per cent of what she imports ;^ she would only
starve or ruin herself by such a course, and she would
excite increased commercial hostility on the part of
nations which are already envious of her prosperity. If
it is worth considering, a further objection exists in the
difficulty of making retaliation effective. It is not neces-
sary that trade should be direct. If French silk were
excluded from Great Britain by a high tariff, it might

*Even most advocates of Protection admit this. Friedrich List, the
author of a National System of Political Economy, wrote : — ' ' A nation
which has already attained manufacturing supremacy can only protect its
own manufacturers and merchants against retrogression and indolence by
the free importation of means of subsistence and raw materials, and by the
competition of foreign manufactured goods".

Arguments for Protection, &c. 123

yet enter through Belgfium and Holland, while German
goods we might wish to exclude could pass through
Holland or Sweden. It is almost impossible to determine
the country of origin and to make a workable scheme
discriminating against the imports of particular countries;
the only resource would be thorough-going Protection,
which for us is as impossible as it is undesirable.

But, it is objected, a manufacturing nation might, at
all events, tax the manufactured articles which enter
the country. Now, our imports in 1896 were valued
at ;^44i,ooo,ooo; of these, food-stuffs amounted to
;^ 1 57,000,000, articles paying duty to ;^3o,ooo,ooo,
goods which may be classed as raw materials to another
;£" 1 57,000,000, and goods manufactured or in some stage
of manufacture to ;^97,ooo,ooo. Some of these last are
finished products, such as clocks, watches, French
boots, hats, gloves, &c. ; others are partly-manufactured
goods, such as linen yarn, iron bars, leather, straw-
plaiting, &c., all of which are utilized as materials for
other British industries. The question has been raised
as to what is a manufactured article and what is a
raw material. Definition does not solve the practical
question, it is entirely a matter of degree; for it might
be maintained that every import which has passed
through the hands of man, such as fleeces or raw cotton,
has already passed through one stage of manufacture.
Let us take the example of leather, of which we im-
ported ;£'7, 500,000 in 1896. On examination we find
that leather imports include hides tanned and curried or
dressed, and goat and sheep skins dressed. The whole
item might be treated as raw material for the purposes
of British industry, since it is here converted into boots
and shoes, harness, portmanteaus, and numerous other
finished articles, of which, beyond her own consumption.
Great Britain exports nearly ;^2, 000,000 worth. The
tendency is evidently for the rougher early processes of
tanning to be carried out in countries where materials are
abundant, and for British industry to be limited to the
finer processes which call for greater skill and also
afford a higher wage. The same remarks apply to
timber, which is now generally imported from Canada

124 The Free-trade Movement.

and Scandinavia sawn into given lengths and sizes, or
even advanced a further stage. The complexity of
modern production makes far greater subdivision of
employments, and this is furthered by the advantages
which situation offers for any process. It is thus im-
possible always to draw a sharp line between the raw
material and the manufactured article, for the latter is
the result of evolution progressing by many stages.
The finished article of one country or locality becomes
the raw material of another, just as bricks are the
materials of house-building; pig-iron, yarn, wire, zinc-
sheeting, and tin plates are the products of certain
industries and the raw materials of others. The country
which in this classification performs the final process,
becomes the finishing-shop; its work is more refined,
less arduous, and better paid ; its skill is greater and its
subsistence is gained with less expenditure of toil; and
its finished products, when re-exported, pay for its im-
ports both of raw materials and other consumable
articles. The world-wide organization of industry gives
greater eflficiency to the labour of the whole world, and
this kind of efficiency is best promoted by the removal
of all impediments to trading. ^

Among minor advantages alleged to accrue to a
nation from a protective duty, it is urged that the
protected industries are enabled to employ larger
capitals, and thus call into fuller play the law of in-
creasing returns; also that Protection permits an in-
dustry to be started which, without such aid, would at
once be crushed out by the competition of established
organizations operating from foreign shores. As abstract
arguments these hypotheses are valid, and possibly

1 No doubt it will be here pointed out that highly-finished machinery is
now being imported from the United States and Germany, and that Britain
is being attacked in her most vital part. Circumstances favouring foreign
competition with our staple industries are discussed in a subsequent chapter,
but it may be at once stated that for these Protection affords no antidote.
If the British mechanic allows himself to be surpassed in skill, intelligence,
or industry by others, or if he permits any restraints upon the full efficiency
of his working powers, so that he can no longer compete with foreign
industry, not only in the home markets but in the markets of the world,
neither Protection nor anything else can avail to maintain the supremacy
of British manufactures.

Arguments for Protection, &c. 125

instances might be adduced of very exceptional circum-
stances in which the conditions would obtain. But
in dealing broadly with the subject, while we may be
prepared to admit the possibilities, we must recognize
that the problems of trade are essentially practicaly and
cannot be kept within the limits of academic discussion.
Capital is very plentiful, and highly-organized machinery
exists for lending it; capital is easily tempted abroad,
and affords opportunities for large production wherever
an Industry can succeed; but large production by the
aid of cheap capital Is best illustrated In Free-trading
Britain. With regard to the second point, it has not
been found that governments have shown either the
capacity to discriminate between instances, or the
strength to confine their favours to such exceptional
cases of Interference; they are prone rather to yield to
general demands for interference, and indeed when once
the principle has been admitted In any country. Protec-
tion has been applied all round without any reference to
the conditions in which assistance might possibly afford
an ultimate economic advantage to the community.
The history of tariffs in young countries endorses the
opinion aptly expressed by Professor Nicholson, that
*' Free-trade, like honesty, remains the best policy".

Bounties are a peculiar form of Protection. They
were a device of mercantilism to encourage exportation.
Under a system of trade which laid stress upon exports
and the Importance of securing a favourable balance
in gold, bounties or premiums were given on certain
branches of home industry to enable them to obtain
markets abroad by lowering their prices. The bounty
system Is a natural complement to the system of placing
duties on Imports; both flourish together. As the
latter excludes the cheaper foreign goods in order to
protect articles produced at home, so the former subsi-
dizes an industry which could not otherwise succeed in
the country, the community being taxed for the amount
given to the bounty-fed Industry. The French and
German sugar bounties are the most notable examples
of bounties at the present day. One effect of the
bounty-fed sugar industry in France, together with the

126 The Free-trade Movement.

French prohibition of foreign sugar, is that sugar is 3^.
a pound cheaper in Great Britain than in France, while
the consumption is 86 pounds per head of population in
Great Britain compared with 25 pounds per head in
France. Again, the confectionery, biscuit, jam, marma-
lade, and sweet-drink trades have received an immense
stimulus in Great Britain owing to the advantage
arising out of the cheapening of sugar by foreign
bounties. Fruit gathered in Southern France is sent
to Great Britain in British steamers to be made into jam
with cheap French sugar, and such British-made pre-
serves are re-imported for French consumption. France
also gives a bounty of some 65 francs per ton on iron
and steel ships. These vessels could be bought from
the United Kingdom and the whole bounty saved ; but
for the satisfaction of building them in France the
nation is taxed to nearly half their cost, ship-builders
alone being the gainers. Yet, according to Lloyd's
Register^ in 1895 the United Kingdom launched merchant
shipping to the amount of 950,967 tons, while in the
same period France launched only 22,000 tons, and in
1896 Great Britain completed 1,159,751 tons of merchant
shipping, as against 365,000 tons by all other nations.
Some writers complain of the ''disabilities under which
British shipping labours in competition with the vessels
of bounty-paying countries " ; but it requires very slight
observation to perceive that the disability lies with
France in this matter; France has a natural disability in
the matter of materials and resources for ship-building,
which renders it more economic for her to purchase
than to build ships. If, in the circumstances, she
persists in building vessels by the aid of bounties, it
must be at the expense of the community which provides
the additional cost from taxation. It is a matter of
common knowledge that M. Thiers gave his support
to the sugar-bounty system with the remark that " he
wished to see the tall chimneys smoke". To his
imagination these chimneys seemed evidence of manu-
facturing prosperity and a sign of increasing wealth to
France. The test, however, is not satisfactory when
we learn that such prosperity as it indicates is purchased

Arguments for Protection, &c. 127

at the cost ot heavy taxation to the remainder of the
community. Of 3,000,000 tons of sugar produced on
the Continent two-thirds are exported by the aid of
bounties, the population pays this bounty, and for the
remaining" one-third which it consumes it pays more
than it receives for all it exports. To find a market
for the produce of sugar-refining by selling it to another
country at less than cost of production cannot enrich a
nation, though the loss may be obscured by the indirect
methods of bounties, and the erection of refineries with
smoky chimneys may give the appearance of additional
employment.^

Meanwhile European sugar is practically excluded
from the United States by a bounty on home-produced
sugar and a 40-per-cent duty on imported sugar. The
result is that a syndicate has been formed which controls
about 80 per cent of the supply of sugar consumed in
the States. It is strong enough to fix its own price, and

^The report of the West India Commission (issued October, 1897) gives
the latest information about the sugar-bounty system and its effects.

Germany pays an export bounty of 25J, a ton, and has a protective
customs duty of ;^io a ton. France gives a bounty of 90J. a ton, and has a
protective duty of ^24 a ton. In both countries there is an excise duty
equal to the amount of the customs duty, which, under the monopoly, the
producers recover in the price. The effect is that on the Continent sugar is
3^. or 3}id. a lb. dearer than in England.

It is calculated that the cost to consumers from the continental system
in Germany, France, and Austria amounts to ;/^47,ooo,ooo a year, and
that those countries pay in bounties ^^5, 000,000 a year. Deducting from
the total cost the excise of ;^20,ooo,ooo, this leaves a loss of ^^32,000,000
for the three countries.

Between 1882 and 1896, the period during which the continental bounty
system has been in full operation, the world's production of sugar has
increased from 3,799,284 to 7,474,000 tons, and prices have fallen quite one-
half. The fall is explained as mainly due to reduced cost of production,
and in British Guiana, where the latest improvements have been adopted,
the price of cane-sugar has fallen from ^16 a ton to ^^8 and £g a ton. But
these improved methods are not generally adopted throughout the West
Indies. Of the total exports (;^6, 106,000) of the West Indies, one-half
(;^3, 250,000) consists of cane-sugar, and this is threatened by the conti-
nental competition of beet-sugar. The commissioners reject the proposal
to give a bounty on West Indian sugar, and two out of three reject also the
proposal of countervailing duties, while the third recommends a duty of
one halfpenny per lb. This, on the average consumption of 80 lbs. per
person in the United Kin^^dom, would mean y. ^d. per head of population,
or j^6,5oo,ooo a year. (Dther suggestions point to more direct aid in en-
couraging other industries in the West Indies and to developing the other
resources of these colonies.

128 The Free-trade Movement.

has made a profit of about ;£'5, 000,000 a year. In such
stupendous monopolies we have a natural fruit of Protec-
tion. In Great Britain, however, owing to her Free-
trade system, these syndicates have had little success in
raising prices They have to encounter, sooner or later,
the consequence of the large area of supply which open
competition creates, and which responds to the certainty
of a free market. The area is too vast to be readily
brought under the control of a single combination in the
case of a necessary of life. Trusts exist in Great Britain,
but their tendency is to steady production and effect
economy and cheapness by the organization of the in-
dustry and the distribution of the product on a larger
scale. The safeguard is in free competition. A similar
economy, accompanied by a fall in price, is claimed for
the American Standard Oil Trust, which has, however,
to compete with all other illuminants, and finds a large
market in Europe only by its cheapness.

The working of the bounty and protective system has
recently been illustrated in Argentina. Following the
lead of other countries, Argentina imposed a heavy duty
on imported sugar, amounting to some ;^i8 a ton.
Consequently sugar-planting received a great impulse,
so that the production soon began to exceed the home
consumption. It was necessary then to find a fresh
market, and the experiences of France were repeated
almost exactly. The Government placed an internal
duty upon sugar, and gave a drawback on its exporta-
tion which amounted to a bounty. This was a further
influence favourable to planting, and production again
went on rapidly until it was found to have greatly ex-
ceeded the consumption. The sugar manufacturers are
now (1897) attempting to form a trust to deal with the
surplus, to force sales abroad (of course at a loss) and
to check production at home. Such are the difficulties
which arise when the natural progress of industry is
interfered with to foster a special trade.

It is often maintained that Great Britain ought to
** countervail" the bounties of other countries by impos-
ing duties equal to the bounties, and frequent efforts
have been made to secure this kind of legislative inter-

Arguments for Protection, &c. 129

ference on the grounds that our industries are unfairly
opposed by assisted competition. The attempt of this
mode of retaliation, if made, would most probably not
be successful, for the bounties might easily be augmented,
and it is exceedingly difficult to ascertain their exact
amount and actual effect on trade.

But a fatal objection to countervailing duties is, that we
cannot draw a clear distinction between them and pro-
tective duties; all aim at raising prices by state interven-
tion. Countervailing duties are a form of retaliation
upon bounties in favour of some other source of supply.

Bounties, tariffs, differential duties, and countervailing
duties are all alike interferences with production or con-
sumption. If England adopted countervailing duties
against continental sugar bounties, she would enter once
more into the conflict of adjusting tariffs — an expensive
and disturbing process, and there would be no limit to
the attempts to exclude foreign goods on some pretext
or other. In fact, the principle of non-intervention being
surrendered, the path would be opened for the re-introduc-
tion of all kinds of interference. If, for example, this
kind of protection were afforded to the British sugar in-
dustry against French and German bounties, the farmers
might reasonably demand like treatment for corn against
the low rates of American railways, or '*the unfair fer-
tility" of superior foreign soil. Many similar claims could
easily be sustained, for bounties are given in a variety
of forms, the natural and artificial shade into one another,
and cannot be clearly discriminated. Some countries
give bounties in money, some in drawbacks or exemption
from taxation, some in free grants of land; in some
countries the state undertakes the organization of an
export, as in the case of Australian butter ; some give
subsidies to steamship companies and to railways, which
reduce the cost of transport. All in some degree, diffi-
cult to estimate, tell upon the price of the goods exported,
and so far cheapen them to the importing country at the
expense of the exporting country.

The principle of Free-trade is easily grasped ; it inter-
feres neither with producer nor consumer ; its merits are
obvious and can be followed; the perplexities of the
(MI60) I

130 The Free-trade Movement.

tariff system are endless, and the injuries it inflicts are
too serious to admit of any trifling with schemes which
would lead to the possibility of their recurrence. Move-
ments in that direction, however plausible, are only
Protection in disguise.

Chapter VII.
Fifty Years of Free-trade.

The essence of the Protectionist contention is that
articles excluded by tariffs will be produced at homey and
thus home industries will be encouraged. The weakness
of this contention, so far as it fails to recognize the ad-
vantage obtained from the exchange of products in
foreign trading, is examined in the previous chapter.
We shall deal with only one question here. Did the
protective system, during the thirty years of its applica-
tion to agriculture, feed the people of this country? The
labourer who exclaimed, '* I be protected and I be starv-
ing!" summed up the results of the Corn-laws on this
point. The history of the thirty years from 181 5 to 1845
is a continuous record of distress; periods of scarcity
and privation, fluctuating prices alternately starving
labourers and ruining farmers, bread riots and disturb-
ances, in manufactures uncertainty and loss. At length
a famine in Ireland, following closely upon manufactur-
ing depression and starvation in Great Britain, termi-
nated the system devised to secure an abundant home-
supply of food at steady and profitable prices. No
principle could have received a fuller trial, and none
could have failed more completely. With a population
less than half the present population of Great Britain,
the condition of the people was such that multitudes,
daily employed in the occupation of rearing cattle and
growing corn, rarely tasted any meat except bacon, and
many could not earn sufficient bread to maintain their
own families in health and energy.

Fifty Years of Free-trade. 131

The test of a principle is in its total effects^ not in
any partial or peculiar advantage to individuals; every
monopoly benefits the holder, but it does this at the
expense of others; and if we inquire into the results of
the Corn-laws, we find they were a cause of great misery,
want, and suffering* to a large proportion of the com-
munity, and of loss and injury to many others.^ The
abolition of the restrictions gave immediate relief, an
era of prosperity began, and fifty years of free-trading
show no such instances of suffering and distress as those
which preceded it. On the contrary, the progress of the
nation in comfort and material well-being has been con-
tinuous and marvellous. Fluctuations have accompanied
the advance; the Crimean War, the American Civil
War, and other misfortunes have imposed checks, but
the outcome of the change is that Great Britain is the
best-fed country on the globe, although it is the country
which produces the smallest proportion of its own food.
Common observation reveals the fact that the lot of the
working-man has entirely changed, and that his eco-
nomic condition in the present day would be an enviable
one to those circumstanced as were the labouring classes
of the early forties. Statistics of wages and prices show
that, with easier work and shorter hours, a labourer gets
now about 65 per cent, factory operatives 75 per cent,
and a skilled mechanic 90 per cent more of necessaries
than he did fifty years ago. Sir R. Giffen has stated
that nearly the whole of the economic advantage of the
last fifty years has gone to the working-classes, that is,
their position has not only changed absolutely as regards
the comforts of life, but relatively as regards other
classes in their share of the general prosperity. 2

1 As already stated (chap, iii.), various causes of distress operated during
the first forty years of the century — bad harvests, the war, with its burden
of taxation and debt, the Poor-law, which, until 1834, fostered an idle and
inefficient population — the rapid changes in manufactures also dislocated
industry. The Protective system accentuated all the evils arising from these
various causes, created scarcity of food, and prevented the means of profit-
able employment.

2 " Hence, while capital has increased, the income from capital has not in-
creased in proportion. The increase of earnings goes exclusively, or almost
exclusively, to the 'working-classes'". . . . "What has happened to the
working-classes in the last fifty years is not so much what may be called an

132 The Free-trade Movement.

This wonderful transformation is of course not to be
assigned exclusively to the Free-trade movement; the
marvellous progress of science, the conquest of man
over the forces of nature, and their subjection to his
purposes, are features of the century which need no
detailed enumeration to remind us of their vast import.
But the reform of 1846 and the subsequent fiscal changes
were factors of the deepest importance in the scientific
development and industrial progress of this country; and
the Free-trade movement may be credited with rendering
possible the freest application of scientific discovery and
invention, so as to lead the nation to a standard of life
hitherto inconceivable.

As a self-supporting country Great Britain must have
continued to devote the chief part of her labour and
capital to obtaining food from her soil; and we have
seen what was the average of comfort when that was
attempted. Her population must have remained smaller,
and her resources in other industrial directions could not
have been utilized. Under Free-trade she was enabled
to give full play to her mechanical and manufacturing
genius and reap the full advantage of her mineral wealth,
relying upon an abundant supply of cheap food in ex-
change for her other products. The abolition of hin-
drances to trade gave to the nation fresh possibilities,
and called into activity the energy and skill by which
they could be realized. The scientific discoveries and
wonderful inventions which have enriched Great Britain
through her various industries, and have even made agri-
culture a mechanical industry to some extent, could never
have found an opening in this country; the vast indus-
tries of coal, iron, machinery, of cotton and wool, &c.,
could never have been developed under a system which
compelled the country to produce its own food, and ex-
cluded the agricultural products which are now pur-
chased by means of these industries. Free-trade was
therefore a necessity prior to the full and profitable ex-
improvement as a revolution of the most remarkable description." — ("On
the Progress of the Working Classes" — Financial Essays, vol. ii.) See also
Labour in the Longest Reign, pp. 9-16, by Sidney Webb, for similar testi-
mony as regards men in organized trades.

O* TBn:

Fifty Years of Free-trade?^ i?^" 133

pansion of those industries which have enriched Great
Britain during the last fifty years. The industrial re-
volution, with its mechanical inventions, factory-system,
and the steam-engine, began its operation more than
fifty years earlier, but the masses were, notwithstanding,
poor and half-starved until the advent of Free-trade.

The Free-trade movement really involved at root much
more than the revoking of the Corn-laws and the reform
of our fiscal system, though these were the actual matters
about which it was definitely fought out and decided.
It meant the adoption of the idea of enlarged opportunity
for enlightened individual action, and for true freedom
of contract, both as regards trade and labour, on the
largest and fullest scale possible. Adam Smith had
advocated ** natural liberty" in this sense; he contended
for the removal of all restrictions which operated in-
juriously, he urged the justice of workmen's combina-
tions and the necessity for education as a means of
conferring higher freedom and opportunity, as well as
the removal of protective tariffs and bounties on food.
Errors sometimes arise in regard to Free-trade among
its most ardent devotees owing to a too narrow inter-
pretation of its doctrine. Having for its aim the pro-
motion of the wealth of nations, in principle it would
apply to any measure, which, by removing obstacles to
trade in any direction, makes for that end. Commercial
treaties (in the absence of fuller measures) are consistent
with the spirit of Free-trade, which is one of peace and
good-will, displacing jealousy and warfare by means of
friendly business relations. Arrangements between na-
tions, involving ** give and take " of many kinds, recog-
nize mutual interests; in various ways the world is
being educated to appreciate the advantages of improved
intercourse and enlarged markets. International com-
munication (through telegraph, post, travel, newspapers,
and financial relations) all point to the advantages of
diminished friction. It is difficult to believe that artificial
obstacles to the full enjoyment of nature's products can
be permanently maintained. So long as the pressure is
not felt acutely the burden may be tolerated, but there
are many evidences that sections of other nations smart

134 '^^^ Free-trade Movement.

under a consciousness of the injury inflicted upon them
by tariffs on foreign merchandise.

Great Britain, with her growing population, found the
pressure of tariffs upon food intolerable in a time of
scarcity, and the lesson of the economic advantage of
free exchange was brought home to her by the most
impressive kind of teaching that could be conceived.
No other country has had the principle enforced in the
same manner, and those who in protective countries
fully realize its worth are confronted with the difficulty
of dealing with interests which would suffer loss if the
tariff-fed manufactures of those countries were suddenly
placed in competition with the products of other coun-
tries. But the trend of events is towards universal
trading. The boundaries of race and nation are being
effaced in the operations of exchange, and gradually the
economic area will expand to comprise the whole pro-
ductive world. Science cannot continue to bring nations
nearer together, bestowing fresh gifts of wealth and
power upon all, without at length the fact dawning upon
them that to resist nature's generosity, by imposing arti-
ficial limits upon the acceptance of her lavish productive-
ness, is much the same as to refuse to enjoy the use of
steam-power, or to deny themselves the fruitful dis-
coveries of electricity.

Statistics of wealth, commerce, rates of wages, sav-
ings, consumption of food, &c., of shipping, revenue,
and of the expansion of the great staple trades, give
indubitable evidence of the vast advance in comfort of
the nation since the abolition of the protective regime.
In considering these figures we must remember that
though young countries, like the United States and
Australia, rich in natural gifts, and fed with streams of
emigrants from Great Britain, have advanced rapidly
during the past fifty years, their progress starts from a
comparatively recent date, while that of Great Britain is
the growth of a more mature and relatively populous
country. To compare their progress in some respects
with that of Great Britain would be to compare the
growth of the child with that of the man. Taking note
of like circumstances, no country has made the same

Fifty Years of Free-trade. 135

relative progress as Great Britain during the past fifty
years.

In 1840 the population of the United Kingdom was
26^ millions, it is now nearly 40 millions, living at a
vastly higher level of comfort. The population had
grown rapidly from 1800 to 1840 under the stimulus of
the new factory industries and under the influence of the
Poor-laws, which practically gave a bounty on births, but
the standard of living had not advanced; with the re-
moval of restrictions on trade, improvement began, and
it has proceeded at an accelerated rate. Meanwhile the
nation has supplied the Colonies and the United States
with some millions of its able-bodied offspring as emi-
grants, and has further provided hundreds of millions of
capital from its savings to enable them to develop the
newer regions in which they have settled. Although
the population of Great Britain increased 50 per cent
(from 12^ millions to 18^ millions) between 181 1 and
1 84 1 the export trade made no progress : it declined
from 181 5 to 1836, and had barely recovered by 1844.^
In 1845 our total foreign trade (imports and exports)
only amounted to ;^ 160, 000, 000, or less than £c^, 15^.
per head of the population, and the exports were greater
in value than the imports. The effect of the repeal of
the Corn-laws was an immediate increase in our foreign
trade; the exports for the twenty-five years following
1845 were nearly three times those of the preceding
twenty-five years, though some of this increase must be
attributed to the effects of the gold discoveries. By 1854
this commerce amounted to ;^268,ooo,ooo, and the im-
ports exceeded the exports by ;£"32,ooo,ooo. In 1896 the
total foreign trade had grown to ;^738,ooo,ooo, being
;^i8, 10^. per head of the population, and the imports
were in excess of the exports by ;£" 130, 000, 000. This
large surplus, which has been annually increasing for

1 See Porter's Progress of the Nation, pp. 361-362.

Declared Value of Exports of the United Kingdom.

1815, ... ;^5i.632.97i

1821, 38,870,851

1831 47,020,658

1844, 58,584,292

136 The Free-trade Movement.

more than forty years, is practically all profit to Great
Britain, arising from interest on foreign investments,
profits on trading, earnings of British vessels, &c.

The increase in money values of our foreign trade
does not fully represent, however, its real magnitude;
the general fall in prices during the last quarter of a
century should be taken into account, in which case the
business would need to be estimated at probably some
50 per cent more. A better idea, perhaps, of the magni-
tude of our foreign trade is gained from the statement
that it is more than the total foreign trade of Germany
and the United States together, and that while it
amounts to £18 per head of the British nation, the
foreign trade of Germany is only £y per head of its
population, and that of the United States is £4, los. It
must be remembered that in this immense trade 70 per
cent of the exports are manufactures, and an equal pro-
portion of the imports consists of agricultural produce
(food and raw materials), and that the industrial inter-
change has been stimulated by the removal of impedi-
ments to free exchange. Great Britain possesses about
30 per cent of the commerce of the world in manufac-
tures, while France and Germany jointly control about
an equal amount.

Consequent upon this enormous growth of business
with distant parts, and under the same stimulus of free
enterprise, another vast source of wealth has grown up
in our ship-building and carrying trade. Great Britain
owns more than half the tonnage of the mercantile ship-
ping on the globe, and does more than half the convey-
ance of goods by sea. During the last fifty years her
carrying power has grown fourteen-fold, her sailing ton-
nage (2,189,000 tons) is only slightly greater than that
of 1840, but her steam tonnage has been developed from
an insignificant amount to more than 10,213,000 tons,
about 55 per cent of the steam tonnage of the world.
Her ships employ a quarter of a million of seamen,
ship-building has become one of her most thriving and
highly-paid industries, and during the last fifteen years
has annually added to her mercantile sea power some
600,000 tons. It will be seen that this great expansion

Fifty Years of Free-trade. 137

has taken place since the repeal of the Navigation Acts
in 1849, and it is under the system of free competition
that the United Kingdom has become the general carrier
of the world, and that her commercial navy has grown
in so remarkable a degree. Meanwhile under protective
tariffs the United States shipping has declined, until
only 23 per cent of her foreign trade is carried in her
own vessels. Out of a total tonnage on the globe of
25,907,451 tons the United Kingdom and her Colonies
possess 13,482,876 tons, the United States comes next
with 2,326,838 tons, Germany has 2,029,912 tons, and
France with bounties on both ship-building and freights
possesses only 1,162,382 tons.^

Railway development and home trade have run paral-
lel with that of iron ship-building and foreign commerce.
Railways were in their infancy when Queen Victoria
ascended the throne. In 1845 only 2400 mil^s had been
laid in the United Kingdom, fifty years later this had
increased to 21,174 miles. The enormous traffic is one
further proof of the prosperity of the nation; in 1896 the
passengers conveyed numbered 981,603,296, the goods
amounted to 356,468,009 tons. The British railways,
created by voluntary enterprise, represent wealth valued
at more than ;^ 1,000, 000, 000. No doubt the railways,
roads, canals, may be said to be concerned with the
internal development of the country; they have been
necessitated, however, by the manufacturing expansion
which received so strong an impulse from the new con-
ditions of trade. Internal transport is a needful acces-
sory to commercial development, with its elaborate
specialization and localization of industry, and the extent
of the machinery of transport is an indication of the
degree to which this differentiation has been carried.

If we next glance at the textile trades (cotton, wool,
flax, silk, hemp, and jute), we find our factories employ-
ing more than one million operatives, and manufacturing
one-fourth of the raw materials produced in the world.
Thus we provide about one-fourth of the clothing of
civilized races from materials which, with the exception

1 Statistics from Lloyd's Register of British and Foreign Shipping, 1897-8,
quoted in Whitaker, p. 728.

138 The Free-trade Movement.

of wool and flax, are entirely imported from other
countries. In the interval since 1846 these various in-
dustries have increased not only in extent and value, but
in efficiency and output per man. During- the last fifty
years the total value of the manufactured products of all
the textile trades has grown from some ;^^90,c>oo,ooo to
about ;^i90,ooo,ooo per annum. Between 1854 and
1895 the import of raw wool increased from 104*9 to
771 million lbs. The cotton trade alone daily pays in
wages ;£^ioo,oc)0 and turns out 14,000 miles of cotton
cloth. At present we consume at home a little more
than half the cotton goods manufactured and export the
remainder.^ With some vicissitudes due to various
causes, such as the American Civil War (which checked
the supply of cotton), to the construction of mills in
India, to the natural development of the cotton industry
in other countries, and to the fluctuations arising from
the dictates of fashion in dress materials, &c., this large
section of our staple employments has gone on increasing
its consumption and advancing- in value and importance.
Wages have risen, the standard of living of the artisans
employed has considerably improved, and there have
been no such periods of depression as that of 1842, when
half the spinners of Stockport failed, and thousands of
operatives were standing in the streets. The cotton
famine of 1862- 1863 has been the sole serious inter-
ruption, and this was due to a definite cause, beyond
the reach of economic foresight. ^

The great expansion of the manufactures of Great
Britain has been accompanied by a proportionate devel-
opment of her industries in coal and iron, as in turn the
prosperity of the manufactures are dependent upon these
natural resources. It is by means of their joint results
that payment is made for the enormous amount of food-
stuffs which annually enters the kingdom. In 1840 the
output of coal was about 30 million tons; in 1896 about
195 million tons were raised, this output being valued
at ;^57,23i,ooo. The whole mineral wealth produced

* For some interesting statistical details of progress see Mulhall's Na-
tional Progress in the Queen s Reign.
2 Consumption of raw cotton by Great Britain in average periods of five

Fifty Years of Free-trade. 139

was worth ;^76,6oi,ooo, and 838,000 men were employed
in its extraction. More than 40 million tons of coal are
now exported yearly. The production of iron has in-
creased between 1835 and 1896 from ^ million tons to
8]/2 million tons. Great Britain exports annually about
4 million tons of iron and steel goods. The annual
value of iron and steel manufactures is ;^ 115,000,000,
and the increase in value continues in spite of the
enormous reduction in cost which has been caused by
recent inventions and new processes. Machinery, cut-
lery, tools, steel rails, eng^ines, and apparatus of various
kinds form a considerable part of our exports, as well
as of the provision for the demands of home industries,
and employ skilled artisans at several times the amount
they could possibly earn in agriculture if Great Britain
were a self-supporting* country. The only extensive
industry which has not advanced during the Victorian
era is agriculture; the causes of this exception are of
sufficient interest and importance to call for discussion
in a separate chapter.

years, and exports of piece-goods and yarns, from Ellison's Annual Review
of the Cotton Trade for 1895 : —

Consumption by Great Britain.

Export of Piece-goods.

1841-45.

521,300,000 lbs.

1840.

790,600,000 yards.

1856-60.

947,300,000 ,,

1850.

1,358,200,000 „

1861-65.

628,600,000 ,,

1870.

3,252,800,000 ,,

1871-75.

1,228,600,000 ,,

1890.

5,124,200,000 ,,

1881-85.

1,444,100,000 ,,

1895.

5,033,400,000 ,,

1891-95.

1,579,400,000 ,,

1896.

5,218,248,000 ,,

Wool.

Raw Wool Imported.

Export of Yarns.

1854.

104, 900,000 lbs.

1840.

118,500,000 lbs.

1870.

259,400,000 ,,

1850.

131,400,000 ,,

1880.

461,000,000 „

1870.

187,700,000 ,,

1890.

629,200,000 ,,

1890.

258,400,000 „

1895.

771,000,000 ,,

1895.

252,100,000 ,,

United

Kingdom

[.

Coal Raised.

Pig-iron Produced.

1870.

110,431,000 tons.

1870.

5,963,000 tons.

1880.

146,969,000 ,,

1880.

7,749,000 ,,

1890.

181,614,000 ,,

1890.

7,904,000 „

1895-

189,661,000 ,,

1895.

7,703,000 „

1896.

195,400,000 ,,

1896.

8,660,000 ,,

140 The Free-trade Movement.

There are many other proofs of the national pros-
perity and progress during the fifty years, that can easily
be made visible by the use of statistics, a few of which
may be indicated. It is computed by official statisticians
that the capitalized wealth of the United Kingdom has
increased since 1840 from about ;£"4,ooo,ooo,ooo to
;£" 1 1,806,000,000; that is, from ;£^i55 to £2g^ per head
of the population, and many facts tend to show that the
wealth is widely diffused. The value of house property
alone has increased nearly fourfold ; and since the
character of its housing is a very real test of the com-
fort of a people, it is of interest to observe that the
proportion of houses rented at sums above ;£^20 has
increased from 7 to 20 per cent of the whole in the same
period. The income-tax, reimposed by Sir Robert Peel
in 1843 as a means of remitting taxes on commodities,
was then assessed on property and incomes valued at
;£'25o,ooo,ooo, and each penny then yielded ;^8oo,ooo
of taxation. In 1895 it was assessed on ;£'7oo,ooo,ooo,
and each penny produced ;^2, 200,000.

Increase of business calls for an enlargement of the
special machinery for effecting exchanges and payments.
The expansion of banking thus forms an excellent index
of the growth of commerce ; the deposits and capital of
the banks of the United Kingdom have advanced between
1840 and 1895 from ;^i 32,000,000 to ;£^i, 11 1,000,000;
that is, from £^ per head to ;^28 per head of the
population. In the same period the accounts settled
by the Bankers* Clearing House have advanced from
;^95o,ooo,ooo to more than ;£^7, 000,000,000. With this
great development of general banking there has been a
corresponding addition to Savings-bank deposits ; these
increased between 1841 and 1897 from ;£"24, 500,000 to
;;^ 1 76,000,000. In 1861 Post-office Savings-banks were
devised to carry thrift to the doors of all classes, and
there are now some eight million depositors in Savings-
banks of all kinds in the United Kingdom. Meanwhile
other openings for investments have been brought with-
in the range of the working-classes, not only in building
clubs, co-operative, trade, and friendly societies (the
deposits in which, together with the Savings-banks

Fifty Years of Free-trade. 141

deposits, amount to more than ;^28o,ooo,ooo), but the
system of joint-stock enterprise with limited liability,
which has proved a most potent instrument for convert-
ing labourers into capitalists, has enabled large numbers
of workmen to become owners of shares in municipal
stock, gas and water companies, railway companies, and
various industrial enterprises.

In the budget speech of 1897 the chancellor of the
exchequer stated that during the Queen's reign the
National Debt had been reduced by ;£" 175,000,000, while
the revenue had risen from ;!^5 2, 000, 000 to ;!^ 11 2, 000, 000;
meanwhile taxation had been so reduced and its inci-
dence rearranged, that, while a labourer earning i^s. 2.d.
a week paid 43^. 3^. a year in taxes in 1841, he would
now pay only 12^. 3^^. a year.

Perhaps in no way can the advance in the material
condition of the masses be indicated with more assur-
ance than by their consumption of necessaries. As the
rich may be assumed to have had always a sufficiency
of necessaries, a reduction in prices would affect only
their consumption of luxuries, and not of necessaries;
any increase in the average consumption of ordinary
commodities therefore has arisen from a larger con-
sumption by those classes who formerly had an inade-
quate supply; the addition, though spread over the
whole population by an average, is really in the lower
grade of incomes. Between 1840 and 1895 ^^® average
consumption of wheat, corn, and flour in the United
Kingdom has grown from 290 to 360 lbs. per head, of
meat from 75 to no lbs. (and meat in 1840 was to the
labouring classes mainly bacon), of sugar the consump-
tion rose from 15 to 88 lbs., of tea from i^ lbs. to
5^ lbs., of tobacco from '86 lbs. to 17 lbs. If Ireland,
which only consumes 40 lbs. per head of meat, be
omitted, the consumption of meat by Great Britain
becomes 120 lbs. per head, which is far in excess of
that of any other European country: Germany con-
suming 75 lbs., France 70 lbs., and Belgium 56 lbs. per
head. The consumption of imported butter, bacon,
cheese, and eggs has been multiplied tenfold in the
fifty years. If diet, as asserted by medical authorities,

142 The Free-trade Movement.

be a chief determining factor in the endurance and
efficiency of labour, there can be no doubt as to the
advantage possessed by British workmen of to-day over
those of the protective era, and also over the labourers
of most other European countries at the present time.

It was on January ist, 1840, that the penny post was
introduced, taxes on advertisements were abolished in
1853, and on newspapers in 1855, the duty on paper was
removed in 1861, the Education Act for England was
passed in 1870. It is difficult to realize the full benefits
of these measures, all of a character removing restrictions
upon knowledge and communication, and all steps in
the development of individual freedom. There was no
daily paper published outside London in 1841, now the
daily issue of papers in the United Kingdom is about
seven millions. The average number of letters per head
of population in the United Kingdom was in 1839 only
three, and in 1895 '^ ^^^^ risen to fifty-three, for England
alone it was eighty per person. The mass of cheap
literature, which now appeals to a reading public, speaks
both for education and for leisure. A free press, un-
taxed papers and advertisements, free education, and
means of extending those opportunities for gaining
knowledge, which have formed so considerable an ele-
ment in the progress of the nation, have removed some
of the most effectual barriers between different classes,
and have tended to promote a feeling of the common
claims of humanity.

Among other significant changes, which have followed
upon the improvement in material condition, is the steady
diminution in crime, convictions having latterly fallen to
about one -third of the number in 1840, although the
population has increased fifty per cent ; pauperism has
also been reduced one -half. Better food, improved
dwellings and sanitation, and reduction in the severity
of labour under modern conditions have told favourably
upon health and the duration of life; the death-rate has
fallen materially, sickness is diminished, and human life
has been prolonged. Very real evidences of the sub-
stantial improvement in the condition of the masses are
to be found in the abbreviation of the hours of labour

Fifty Years of Free-trade. 143

(for British labourers work fewer hours than those of
any other country), in the increase of holidays and
excursions, and the dress and manners of the people.
We read, for example, in a recent Oldham newspaper:
** Holiday club subscriptions for seaside, &c., amounted
this year to ;!^i 50,000. Nearly every factory and public-
house has its club, and the average takings are ;^75o a
year ". The contrast with the descriptions of the same
district in 1842 is very significant. The multiplication
of free public libraries and newsrooms, of which there
are now more than 200 in the country, is a further
addition to the comfort and well-being of the industrial
classes.

Hospitals and dispensaries for the free treatment of
disease have increased, and subscriptions for their sup-
port, received from all classes, indicate not only the
growth of sympathy and social sentiment, but the exist-
ence of a surplus upon which the benevolent feelings
can operate. The Metropolitan Hospital Sunday Fund
alone has raised for this purpose some ;^90o,ooo in
twenty-five years. In Burdett's Hospitals and Charities
for 1897 we read that the working-men of Wigan con-
tributed ;£"58'24 per 1000 of the population to their
hospital, Wolverhampton ;£^4i*73, Birmingham and
Sunderland each ;£^30*i. These are suggestive facts
indicative alike of material progress, regard for health,
and the increase of that consideration and sympathy
with suffering which mark an advance in refined feeling.

The amount expended by the working-classes upon
athletics is a proof of a different kind, but a forcible
one, that they have both energy, time, and money to
spare. A starving people has neither the spirit nor the
means for sport. During the first half of this century
our working-classes had little to spend on amusements.
The healthful pleasures of football, cricket, cycling, and
boating are no monopoly of the rich in this country ; and
indeed the very extensive industries called into existence
by cycling alone are sufficient to demonstrate that a very
large proportion of the community is able to secure, not
only the necessaries, but some share in the luxuries of
life and in its amusements. Again, theatres and con-

144 T^c Free-trade Movement.

cert-rooms multiply at a very rapid rate, especially those
which cater for the working-classes. We learn from
statistics that while, during- the last fifteen years,
teachers have increased 15 per cent, shopkeepers 27,
bank-clerks 30, commercial clerks 34 per cent, the class
of public entertainers has been augmented 50 per cent.

Thus in every field of observation there is most con-
vincing evidence of the great and general advance in
material prosperity, which has been made since the
policy of restriction on commerce was abandoned. That
the problem of poverty yet remains, and that there is a
residuum of helpless, shiftless poor in our large towns,
and that many classes are yet ignorant and struggling
for a wretched subsistence, hidden away in back streets
and alleys, — these, and facts like these, only prove that
there are weighty social questions still unsolved, and
that moral and economic reforms have to penetrate to a
much lower level. Vicious propensities and ignorance
are not eradicated by fiscal legislation. Free-trade is
not an idol, nor is its adoption a charm to cure social
diseases; there is neither fetish-worship nor miracle-
working in the recognition of a sound economic principle.
The whole doctrine is summed up in the liberty and
opportunity for men to employ their labour and expend
their earnings to the best advantage without let or
hindrance. But liberty of purchasing will not make the
ignorant skilled nor the idle industrious; it will not
prevent the waste which arises from drunkenness or
gambling, nor save a uian and his family from the con-
sequences of vice or imprudence. These evils demand
other remedies ; many efforts are being made to combat
them and to reduce these dark spots on the social
horizon. The progress of the last fifty years lends hope
that the comforts and advantages which have been
extended to so large a proportion of the community will,
in time, penetrate to these lower strata also ; meanwhile,
to no class is cheap food a greater boon than to the
struggling workers on the verge of bare subsistence.

Protection in other Countries. 145

Chapter VIII.

Why Free-trade is not adopted in other
Countries.

One of the most frequent objections brought against
the Free-trade policy of Great Britain is that other
countries have not adopted it. It is said, "We stand
alone, and it is presumptuous to think that we are wiser
than all other nations", "The verdict of the world is
against us". Much attention has been drawn to the
sanguine but unfortunate prediction of Cobden that if
England led the way other European nations, convinced
by her example, would follow within five years. ^ But
fifty years have now passed, and not only have the
European nations failed to follow the example of Great
Britain, but some have increased their tariffs, while the
United States have advanced still further on the lines of
Protection, and even most of our Colonies have rejected
the policy of the mother-country in its favour. This
constitutes apparently a weighty expression of opinion
against the Free-trade doctrine, and calls for some
examination.

In the first place, however, Cobden did not rest the
argument for this policy upon its adoption by others.
His prediction was no more than an expression of his
own firm conviction that the merits of a doctrine, so
clearly grasped by his own mind, would be brought home
with equal force to others when its actual operation in
Great Britain afforded visible evidence of its advantages.
But he did not make sufficient allowance for difference
of circumstances or for interested opposition. Adam
Smith had been more awake to these difficulties when
he wrote; John Bright also had no expectation of the
sudden conversion of Europe ; and Peel distinctly stated

^ Speech in the House of Commons, Jan. 15th, 1846: "I believe that if
you abolish the Corn-laws honestly, and adopt Free-trade in its simplicity,
there will not be a tariff in Europe that will not be changed in less than five
years to follow your example".

(M460) K

146 The Free-trade Movement.

that his action rested on the conviction, slowly and
surely attained, of the necessity of Free-trade for Great
Britain, and not upon any anticipation of its becoming
the policy of other countries. Scientific doctrines are
not settled by votes, and new^ principles have ever to
fight their way to general acceptance; and when their
application in practice proves adverse to the interests of
particular classes there can be less hope of their speedy
adoption. Moreover, as the circumstances of all coun-
tries are different, special reasons can be advanced to
show why Protection has taken root so firmly in many
countries. Yet it is not strictly true that Great Britain
has no followers. In Europe several of the vigorous
and flourishing smaller countries — Switzerland, Holland,
Belgium, Denmark, and Norway — are all but Free-
trading, and New South Wales has always been a
staunch supporter of the policy of the mother-country.

Nor must we forget the nature of the trade of other
countries. Great Britain is unable to provide herself
with sufficient food; raw materials and food-stuffs to-
gether account for nearly 75 per cent of her imports,
while manufactured goods are about 75 per cent of her
total exports. This is the case with no other country.
It is true that France and Germany both import some
corn,^ but their chief imports, and almost the entire
imports of most other protective countries, consist of
manufactures, materials for manufactures, and luxuries,
on which the pressure of duties is less severely felt than
would be the case if they were levied upon the immediate
necessaries of life. While, then, different circumstances
have fostered the protective principle in Europe, the
United States, and the Colonies, in all of them the facility
for collecting revenue by the customary method of
duties on imports gave it an easy footing; and in all it
has been maintained by the sentiment of supporting
home industry, and the fallacy that more employment is
found for labour in the country by excluding foreign
competition.

The circumstances that have favoured the growth of

1 France imported 99 million bushels of grain in 1894, 43 millions in 1895,
and 35 millions in 1896.

Protection in other Countries. 147

Protection in the United States are its vast extent and
large resources, great variety of climate, fertile soil, and
abundance of minerals. While richly endowed by nature
with a multiplicity of products, it has been supplied by
Europe with vigorous labourers, and with abundant
capital. Each such adult immigrant to the States from
Great Britain, endowed with average strength and skill,
has been estimated as equivalent to a gift of ;^200 in
his personal capital. A unique concurrence of favouring
conditions in the United States has made for wealth, in
spite of the impediments raised by legislation, and has
enabled the nation to maintain a high standard of living,
and to bear its burden of taxation. It must further be
remembered that the states comprising the Union, trade
freely with one another, and this freedom extends over
51 states and territories differing so widely as New York
and Texas, Florida, and California. The United States
covers an area of 3,500,000 square miles, and includes
almost every variety of climate and every kind of pro-
duct. Were it severed from the rest of the world,
its people might live in comparative affluence, and miss
very few of the comforts and luxuries found elsewhere.
It is not remarkable that they should be able to uphold
a system of Protection in these circumstances. In no
sense, however, can that system be said to be the pro-
duct of healthy conditions. In its origin it was a reaction
against the oppressive ''colonial policy" and ''sole-
market theory" of Great Britain, which helped to pro-
voke the War of Independence; partly in retaliation and
partly for revenue purposes the American colonists
began to tax our exports. In 1789 Presid£iai.Jianiilian
advanced the plausible principle that "infant industries"
should be protected as a temporary expedient in order
to enable them to become firmly established, and that
when they no longer required this safeguard, the duty
would be abolished. With this object duties of 8^ per
cent were adopted for seven years. The war between
Great Britain and France led to complications with the
United States, which then increased its tariff as an
act of hostility. Reduced in 1815, it was again raised
in 1816, and from that time its fluctuations have been

148 The Free-trade Movement.

frequent. Between 1847 and i860 reduced tariffs were
followed by a period of great prosperity. Then came
the Civil War, and the need for revenue led to greatly
increased import-duties, which rose to 47 per cent.
Some relaxation followed the war, but from that time
the tariff has been the sport of financiers and political
parties. With every increase of duty fresh vested in-
terests have been created, and tariff-fed industries call
for yet further aid. What has happened to the ** mfant
industries " of a hundred years ago? Without the help
of duties, ranging from 40 to 100 per cent, they are still
unable to compete with Great Britain, and the tariff is
perpetually under manipulation. A "national policy"
was advanced by Mr. M^Kinley in 1890, by which duties
were still further augmented; the avowed aim of this
policy was "to encourage home industries", "to keep
money in the country", and "to exclude goods made
hy pauper labour^*. With all its natural gifts and ex-
tensive territory, the United States has, in consequence
of its inflated prices, become a most expensive country
to live in; yet American workmen apparently fail to see
that high prices do not necessarily mean high real-wages.
The bounty of nature is counteracted by measures which
end in the creation of monopolies and millionaires, while
labour troubles are frequent, and the contrasts of wealth
and poverty, sufficiently glaring in Old-world cities, are
enormously magnified in the New.

Tariffs have become recognized instruments for creat-
ing vested interests, politics are rendered corrupt, and
the newspapers complain that politicians combine in
log-rolling and in reciprocal voting with the object of
securing an increased share in the plunder of the com-
munity. If the principle of stimulating infant industries
into striving and energetic adult industries ever had an
opportunity for fair trial it has surely been in the United
States, with all its magnificent natural resources; and
yet the duties, adopted for a brief seven years a century
ago, are still in existence, while the rate is enormously
increased and the period of operation is unlimited.

It might be expected that the cotton manufacture
would become a successful industry where the raw

Protection in other Countries. 149

material is a natural product and so many other causes
are favourable, yet the whole export of manufactured
cotton by the United States is less than ;^3, 000,000,
while that of Great Britain, which fetches the raw
material 3000 miles, is ;^6o,ooo,ooo. In the States the
cotton manufacture has been a protected industry since
1816, when a duty of 25 per cent was imposed; yet,
after eighty years of fostering, this industry is protected
by a tariff ranging from 30 to 60 per cent ad valorem.
The iron industry is an even more telling example against
*'the infant industry theory". It was protected in its
early development by a duty fixed at 20 per cent in 18 16;
yet, in order to avoid the competition of English iron
goods, the duty has been augmented by the Dingley
tariff to 60 per cent ad valorem^ under the plea of the
** national policy", which is adopted now that the '* in-
fant industry " theory is no longer tenable. If the iron
industry can compete successfully with British goods,
legislation imposing a duty of 60 per cent to exclude the
latter is surely superfluous.

The effect of the tariff of 1890 upon woollen goods was
to render them nearly three times the price of the same
article in Great Britain. Mr. M'Kinley sustained his
protective doctrine with the remarkable dictum that
"cheap goods were a badge of poverty", and he found
a strong supporter in Mr. Jay Gould, the millionaire,
who supplied the additional argument that **high prices
would teach working men thrift ". Nor is the doctrine
entirely extinct in the United States, that commerce
between nations is war. Only a few years ago Senator
Evarts declared in the United States that ** trade be-
tween nations stands for war in a sense never to be
overlooked and never to be misunderstood". President
M'Kinley's message on the occasion of his accession to
office takes somewhat different ground, and seeks to
combine the conflicting aims of securing high prices,
increasing employment by high tariffs, and ''checking
deficiencies in revenue by protective legislation which is
always the firmest prop of the Treasury"; and yet these
ends are to be secured *'by extending the reciprocity
law of 1890 under which a stimulus was given to our

150 The Free-trade Movement.

foreign trade ". This combination of aims will no doubt
recommend the policy to different groups of Protec-
tionists, but it displays an amount of confusion and
contradiction which is almost hopelessly bewildering.

The tariff will no doubt succeed in creating high
prices by the exclusion of foreign manufactures, but it
strikes a blow at American farming so far as the latter
depends upon foreign consumption for markets. In
1895, out of a total of ;^ 158,000,000 of exports from
the United States, agricultural produce amounted to
;^i 10,000,000. If the United States renders payment
for its exports difficult or impossible in foreign goods,
the British corn -importing trade will naturally move
towards freer markets. Argentina affords just such a
market, and she is becoming a rival to the United States
in the supply of wheat to Great Britain in exchange
for British manufactures.^ No measure could be more
favourable to the extension of commercial relations with
our Colonies also than that the United States, by pur-
suing a policy of isolation, should make it less easy to
dispose of her wheat in Great Britain ; and if at such a
stage, the Colonies, following the example of Canada,
reduce their tariffs to the mother-country, her trade will
naturally flow to their shores, while the tide of emigra-
tion, both of labour and capital, will tend to set strongly
in the same direction.

The duties on linen and sewing-thread supply another
illustration of the waste and expense caused by the pro-
tective system in America. A duty of 35 per cent on
linen has long existed, but the new tariff raises this duty
by various additions ranging from 50 to more than 100
per cent. The duty on sewing-thread is also increased
from 40 to 67 per cent. On the linen duties the New
York Journal of Commerce thus comments : — ** There is
practically no linen industry in this country, and there

1 Imports of Wheat (Grain and Flour) into the United Kingdom.

From United States.

From Argentine Republic.

Total Imports.

Cwts. Per cent.

Cwts. Per cent.

Cwts.

I88I.

45.699.956 ... 64

31 ... —

71.344.659

I88S.

39,709.567 ... 48

335.635 - -04

82.331,552

1890.

33.903.563 •• 41

2.848,771 ... 3-

82.381.591

1895.

45,322,801 ... 42

11,432,721 ... II-

107.261.636

Protection in other Countries. 151

probably never will be. The conditions of our climate
do not favour the growing- of flax, even in parts of the
country which seem best suited for it ; and the industrial
habits of our people do not favour attention to the mass
of tedious and toilsome details that go to the preparation
of this fibre for the loom. " The loss incurred by forcing
an industry in such circumstances is obvious.

The moral of the tariff system in the United States is,
that the benefit to be derived from imposing a tempo-
rary protective duty is a delusion, — the weakly infants
do not grow up to independence, but are always requir-
ing additional nourishment. As in opium-taking, the
doses have to be increased to maintain the unhealthy
system. The tendency of the new tariff" is towards pro-
hibition, but the President's message also contemplated
an extension of markets for American produce, although
the fundamental fact in trading is that a nation cannot
sell without buying. It is of the manufactures of Great
Britain that the United States is most jealous. The
tariff is not levied so much against the labour of inferior
races as against the highly-productive labour of Great
Britain. Through blindness to the fact that the object
of trading, as of all work, is to satisfy wants, the tariffs
of the United States are being pushed more and more
towards a point where much of the labour of the country
will be employed at an economic loss. Waste cannot
increase wealth, and misdirection is a species of waste,
since it causes capital and labour to be employed with
a loss of efficiency.

New and unexpected difficulties are arising out of
tariffs in America; both South and West are calling for
Protection for their infant industries against the East.
So long as they were agricultural and mining only, they
adhered to the ** national policy" ; but some of the San
Francisco papers now urge that the plea for protection
against foreign products holds good equally against
those from other parts of their own country. Consumers
in California are advised to give the preference to the
products of their own States, and to reject those of
the Eastern States. Thus the fallacious principles so
long upheld in international relations are beginning to

152 The Free-trade Movement.

be applied at home between state and state. This is
consistent but serious, and should it be maintained it
promises to put an end either to protection against
foreign countries, or to the free-trading between the
States. The latter alternative would raise very weighty
problems. The latest alterations in the United States
tariff endeavour to give some of the privileges of mono-
poly to the wool-growers of the West ; but no protective
duty can help the grain and meat farmers, who are
taxed heavily on every article of their consumption. So
also a duty has been demanded on imported long-staple
cotton by the cotton-growers of the South, and both
West and South are urged to fight for protection for
their young manufacturing industries. The Western
farmer has hitherto been too weak to resist Protection,
which has always told against him. Will the Western
manufacturer be sufficiently strong to carry it to its
logical conclusion of protecting every state and district
from every other, and if so, how will it affect the Federa-
tion?

In the Australian self-governing Colonies Protection
grew out of the system under which duties were levied
upon imported goods for revenue purposes. These
duties were, after a time, extended to foster infant in-
dustries, on the representation that temporary and
moderate duties would soon accomplish the firm estab-
lishment of manufactures, and give a desirable diversity
of employment. The duties have more recently been
advocated as a means of producing higher wages. The
Colony of Victoria has taken the lead in the protective
movement. It deliberately adopted Protection in 1865,
and duties of 10 per cent were then levied upon clothing,
furniture, boots, and woollen goods. As in other cases,
the duties, once commenced, were afterwards increased
to sustain the vested interests created, and the period
of operation was extended. But after thirty years of
Protection, Victorian industries, with duties of 30 per
cent, are as far from independence as at the beginning.

J. S. Mill's unfortunate, though somewhat guarded,
admission, that temporary Protection might be adopted
in a young colony to start new industries, is often

Protection in other Countries. 153

quoted in justification of such attempts. Mill, however,
contemplated only a very brief period of support to
enable an industry, in the success of which there were
strong grounds for belief, to be started on a scale suffi-
ciently great to overcome initial difficulties, and to pre-
vent it from being crushed at the outset by the rivalry
of old-established competitors. This policy might be
theoretically sound, on the assumption that governments
are omniscient, and can foresee what industries will soon
be thus established so as to stand alone. In practice,
however, this state of things is not realized. Govern-
ments are not endowed with this prescience, nor are
political parties proof against the representations and
demands of their supporters. The experience of a
centuiy of the '* young industry" policy in the United
States, and of more than thirty years in Australia, bears
out what might have been anticipated — that such aid
cannot be restricted to industries sure to succeed, and
proves that the academic exception to free-trading has
no practical application. Cobden in this matter showed
more insight into the facts of politics than the philoso-
pher. Sir Louis Mallet reports a conversation with him
only a few days before his death, in which Cobden said
with peculiar earnestness: "I believe that the harm
which Mill has done to the world by the passage in his
book on Political Economy in which he favours the
principle of Protection in young communities has out-
weighed all the good which may have been caused by
his other writings".^ Without endorsing this remark
as regards the impossible estimate of the value of Mill's
writings, it must be admitted that the theoretical con-
ditions contemplated in Mill's defence of Protection for
young colonies do not seem really to exist, since in
practice it is impossible either to predict what industries
will become self-supporting, or to resist the claims
which are made for the application of the principle of
temporary succour to other fresh industries, or the plain-
tive appeal for further aid to save from ruin those already
established by the aid of tariffs.

^ Quoted in a letter of Sir Louis Mallet, given in the Appendix to Mr.
Gowing's admirable Life of Richard Cobden (Cassell & Co.).

154 The Free-trade Movement.

The argument that it is desirable to stimulate ** diver-
sity of employment" in young countries is one which
seems at first sight to contain some force. It is un-
doubtedly desirable that the varied capabilities of every
country and people should all find useful application
and scope for development. Nor is economic gain to
the community the sole consideration; there are many
social advantages which may be well purchased at some
sacrifice of wealth. But, on examination, it does not
appear either that Free-trading hinders this diversity,
or that Protection encourages it. New South Wales is
not behind Victoria either in the number and diversity
of its industries, or in its social development and educa-
tional advantages. Great Britain and Holland are both
remarkable for the great variety of their industries and
their social institutions, and they are not excelled in
these respects by protective Germany or France. It has
been shown that Protection has a cramping and narrow-
ing tendency from its artificial methods and its want of
enterprise. A country, by using its powers to best
advantage, will inevitably soon develop towns, ports,
and markets, with their special characteristics and many
varieties of trades and employments ; and such a country
is able to afford (as New South Wales has done) both
time and endowment for education and the higher aims
of life. In a large number of cases the natural circum-
stances determine the chief local industries, such as
mining, fishing, and shipping; again, many trades are
subsidiary to others, and must be carried on in or near
to definite centres, distance and cost of conveyance
limiting the power of outside competition. In countries
like Victoria and South Africa, where the discovery of
valuable mineral deposits has led to rapid development
and much wealth, many considerable industries inevit-
ably spring up quickly near the seat of the prime industry,
and civilization soon takes an advanced form. Building
and repairing trades, printing of newspapers, &c., must
of necessity be local, and numerous industries are thus
bound to arise in any country with an intelligent popu-
lation, which has the means of sustaining life in any
degree of comfort. Experience suggests that extension

Protection in other Countries. 155

of freedom has been more fruitful in promoting* diversity
of powers and variety of products than special and arti-
ficial stimulation. Under a protective system some
industries have even declined; of this result, ship-building
in the United States is a forcible illustration. The con-
ditions are too onerous; it has been found more econo-
mical to purchase ships in Great Britain, or to hire their
services, than to build them in the States. It is some-
times urged that immigrants desire to practise in their
new homes the skilled trades acquired in the country
whence they came; but it by no means follows that
healthy diversity is gained by artificially aiding them to
do this. As openings occur, men of capacity or enter-
prise will utilize their acquired skill. There is always a
favourable field for exceptional talent in a young and
growing community; but it is not incumbent upon such
a community to find employment in his own trade for
every artisan -immigrant who comes from a country
differing in development and character.

If we study Protection on the Continent we find many
reasons to account for its survival. The older com-
mercial nations, like Great Britain, inherited the belief,
handed down from *'the mercantile period", that in
commerce between nations there was a hostile element,
and that in trading one country gained at the expense
of another. In France, Colbert's efforts in the seven-
teenth century to create a system of state-directed in-
dustry and commerce accentuated this belief, until
reaction provoked from a leading merchant the retort
of, ^^ Laissez-faire ^ laissez-aller'\ At the close of the eigh-
teenth century restrictions became universal and tariff
wars were constant. The military spirit generated by
Napoleon increased them by arousing national jealousy
and hostility. Gradually more moderate views prevailed,
and an advance was made towards unshackling com-
merce between 1850 and 1873. Duties were reduced,
and the commercial tariff of i860 between Great Britain
and France gave great hopes of better relations. The
Franco -German war shattered these prospects; the
military spirit was revived; the cost of the war and
subsequent military defences caused immense expendi-

156 The Free-trade Movement.

ture in both countries. Revenue was required to meet

it, and the method of indirect taxation was adopted, as
being least offensive and least easily perceived by the
taxpayers. On the pretence of assisting native industries
protective duties are levied, which curtail the foreign
trade and raise only a small revenue from the diminished
imports. This is a wasteful and expensive system, but
has the advantage of not being very obvious, while it
gains some popularity from its apparent encouragement
of home industry. These duties do not press heavily
upon food, since Continental nations are mostly self-
supporting as regards necessaries.^ They do not there-
fore awaken the strong opposition which the duties on
corn did in England.

The case of Continental countries thus differs somewhat
from that of Great Britain, though Protection is not an
advantage to them any more than it was to this country.
The economic objections to Protection are equally cogent
in either case, but its real effects are not widely under-
stood, and vested interests in the protected trades and
in the industries aided by the sugar and other bounties
support it; some revenue is realized from the system,
but at a great economic loss to the nation.

Nor can it be maintained that, in the endeavours to
extend their commerce and find a market for their pro-
ducts, these nations derive any assistance from their
protective system. Their efforts to develop an export
trade encounter at every point the difficulties created by
the limitations upon their imports, and also suffer from
the increased cost of production which is caused by a
protective system. Their attempts at colonizing and at
securing a colonial trade suffer from the same exclusive
methods. In commenting upon the very meagre results
to French trade, which have followed upon the immense
expense incurred in the acquisition of Tonquin and its
maintenance under French rule, M. Cl^menceau lately
said that ** France was paying 50,000,000 francs a year
to find a market for Manchester". France has colonies,

^Though France imports some corn she grows an immense amount of
wheat, averaging nearly 35,000,000 quarters per annum ; while the average
produce of the United Kingdom is less than 8,000,000 quarters.

Protection in other Countries.

157

dependencies, and protectorates with an area of 3^
million square miles. Her total trade with them in 1894
(excluding Algeria and Tunis) amounted to ;^8,5oo,ooo,
while Great Britain's trade with these French posses-
sions amounted to ;^ 1,7 50, 000. Germany has about one
million square miles of colonial territory, and her total
colonial trade amounts to only ;^5oo,ooo; the trade of
Great Britain with her Colonies exceeds ;^ 170, 000, 000. ^
The colony of the Straits Settlements offers a very
instructive illustration of the beneficial effects of Free-
trading. These British possessions, comprising Singa-
pore, Penang, Wellesley, and Malacca, less than 1500
square miles in extent, and with a population of little
more than half a million, have few natural products of
any commercial value ; but there are no customs-duties
whatever, and the freedom of the commerce, combined
with the advantages of the situation as a convenient
emporium for eastern trade, has stimulated enterprise,
which has built up in fifty years a vast transit -trade
amounting to ;^40,ooo,ooo a year. The Settlements
receive from the Dutch East Indies numerous products
for re-exportation, notwithstanding the Dutch restrictions
on that trade, and they form a centre for the collection
and redistribution of the commodities of the East, coming
from China, Japan, Australia, New Zealand, and the
East Indies. The policy of Free-trade has created this
flourishing entrepot out of a small fishing village, and
the trade of the Eastern Archipelago gravitates there
because it can be carried on without hindrance. If the
results of this experiment in Free-trading be contrasted
with those obtained under the restrictions practised by
the Dutch in their settlements, and by the French with
even greater stringency in their attempts to develop and

1 Total Foreign Trade (1895).

Imports.

Exports.

Total.

France

Germany,

United States,
United Kingdom, ...

£

148,725,000
212,305,000
156,944,934
416,689,658

£

134,480,000
171,215,000
172,640,097
285,832,407

„ £
283,205,000
383,520,000
329,585,031
702,522,065

158 The Free-trade Movement.

monopolize the trade of their territory in Cochin China,
an object-lesson is provided from which the conclusion
is inevitable, that in trade, as in the domain of physical
science, movement follows the line of least resistance.

There is little weight, therefore, in the objection that
neither the leading commercial nations of Europe, the
United States, nor our own Colonies copy the example
of Great Britain in free-trading. Their proceedings are
explained by various circumstances, some of which are
peculiar to each ; and though the reasons for their policy
are not economically sound, they are sufficient to account
for their adherence to a system to which they have com-
mitted themselves, and their apparently slight appreci-
ation of our policy forms no argument for condemning
it, or for inducing us to modify it in imitation of the
methods of our commercial rivals.

It has been noted in connection with the arguments
first considered, that Protection has a tendency to stereo-
type the industries of a country and to check its natural
development. A trade once established under the
shelter of legislation has a claim to its continuance. It
is shut in from the healthy play of competition, from the
invigorating influence of new ideas, and from the necessity
for keeping pace with the growth of science and the
industrial advances of other countries. But the law ot
progress is one of change. A country inclosed by
mountains, or shut out from the world by a species of
Chinese isolation, does not display the most advanced
forms of social or industrial life, and restrictions upon
trade are apt to produce like results.

In all times there have been natural movements and
changes in industry, although the forces which created
them operated slowly in more primitive conditions. The
family system of spinning and weaving in homes gave
place to more complex production in factories. Village
manufactures ceased and passed to towns; thus agri-
cultural labourers lost their various other employments
which had been subsidiary, but had now become special-
ized. Industries have frequently changed their localities.
Norwich, Suffolk, and the valleys of Somerset and
Gloucester have ceased to be the great centres of the

Protection in other Countries. 159

woollen industry, which moved to the coal-fields of the
North with the invention of machinery and the steam-
engine. Similarly the iron industry left the forests of
Sussex for the coal-fields of Yorkshire, Lanark, and
other counties. Coventry, once the leading centre of
the silk industry, turned to watch-making ; and when the
American machine-made watch destroyed the trade, with
ready adaptation it took up the bicycle industry, and is
now much more prosperous than at any previous period.
Under a protective system the silk industry might have
remained its staple trade, and we might still be having
distress among protected weavers instead of a prosperous
and increasing population of mechanics. Paper-making
and printing have found suitable settlements at certain
rural towns in Buckinghamshire and Kent, within easy
distance of the metropolis. Great Britain about 1770
was exporting corn to the Colonies and to Russia; a
century later she is dependent upon them for part of her
own supply; in the interval their agriculture and her
manufactures have been developed. India has long
been one of the most considerable markets for Lan-
cashire cotton goods. She is now setting up cotton
mills, and is creating a demand for English machinery
and the products of Yorkshire ironworks.

A few extracts from a recent speech by the Japanese
minister in London pointedly illustrate the effects of
progress upon the character of industry and commerce
from the case of a country which has been open to the
influences of Western civilization, science, and commerce
only some forty years. After alluding to the alterations
in the industrial aspects of the country wrought by the
introduction of machinery, and referring to the great
progress of the manufacture of silk piece-goods and of
cotton-spinning. His Excellency remarked, that ** what-
ever Manchester might lose would be more than made
up by Oldham, Birmingham, or Sheffield; the British
nation, taken as a whole, would thus have nothing to
regret in the industrial development of Japan. Woollen
fabrics were unknown to the Japanese until foreign com-
merce introduced them, no sheep having been reared in
Japan; but the army, the navy, and the police force

i6o The Free-trade Movement.

were now clothed in wool, and many civilians now wore
raiment of the same material. The industry was as yet
in its infancy, but in all probability it would become an
important one in spite of the fact that all the raw material
had to be imported. This afforded an opportunity for
Australian wool-growers. The production of iron is
exceedingly limited, and the bulk of iron and steel re-
quired was obtained from abroad. . . . Great Britain
had an excellent customer in Japan in these commodities,
and would have for many years, provided Japanese
demands were met in an intelligent manner. . . .
Foreign trade, which was valued in 1886 at yen 81 ,000,000
rose in 1896 to yen 289,000,000. Comparatively large
as the commerce of Japan was already, it was sure to
grow rapidly, and the country might assuredly be re-
garded as full of hopes for Western manufacturers and
merchants."

These examples are sufficient to show that it is a
natural law that industries tend to move to, and flourish
in, the localities best adapted to their requirements ; and
that owing to discoveries, the spread of science, and the
rise of new conditions, this locus is not permanent, but
is ever changing to take advantage of more favourable
circumstances. By artificial obstructions, such as pro-
tective tariffs, we may attempt to direct and retain
industries, but only at a considerable loss, and waste
of natural productiveness. Progress is a product of the
combination of the two universal laws of unity and
variety — of persistence and change. Free commerce
avails itself of both; restraints on commerce tend to
destroy some of the advantages to be derived from
change, and so far retard national progress.

Although, for reasons adduced. Free-trade has not
been adopted by other countries or by most of the Colonies,
yet there is strong indirect evidence for the soundness
of the principle of commercial freedom in the internal
fiscal arrangements of large states and federations of
states. In all cases of the extension of the boundaries
of a country, or the inclusion of a new member, fiscal
federation is adopted. The United States place no
restrictions on the trade between the several states, and

Protection in other Countries. i6i

every new territory admitted to the Union is placed on
the same footing-; the same principle is adopted in the
Dominion of Canada, and in Russia and Germany. But
if Protection has any economic advantage, its virtue
would not cease with the political inclusion of a territory
in a country; the local industries should require the same
defence as formerly. It is found, however, that the larg-er
the country the gfreater is the gain from the removal of
these restraints. The reason is plain, the field of com-
mercial intercourse is greater, and there is a nearer
approximation to complete free-trading. If a country is
of vast extent and its climate and products very varied,
and if it possesses minerals as well as abundance of land,
such a country is most favourably situated for industrial
independence, for it has within itself resources of all kinds,
and it will suffer less than others from attempts at being
self-sufficing. On the other hand, the smaller the coun-
try and the more specialized its products, the greater is
the advantage which it gains from contact with others.
Relations of mutual interchange with countries diff"ering
economically from themselves become essential to small
and populous countries, and such in an eminent degree
is the case of Great Britain.

Under a natural system of trade, industries adapt
themselves to wants ; under Protection they are apt to
be either abnormally stimulated and to over-produce, as
is the case with the sugar industry in France ; or the
privilege tends to develop them into strong monopolies,
often sufficiently powerful to completely control an in-
dustry. In all protective countries the interests of some
classes thus become an obstacle to the adoption of Free-
trade, a difficulty seen very clearly by Adam Smith.
In free-trading Great Britain few syndicates have suc-
ceeded in maintaining high prices ;^ foreign competition,
sooner or later, comes in and defeats attempts at arti-
ficial monopoly rates. The United States, the country
in which Protection has had its strongest hold, have
become the home of trusts and corners. There are

* This is true at all events of necessaries and articles of general consump-
tion; no doubt the prices of some articles (diamonds, iodine, quicksilver,
&c.) with a very limited supply are controlled by monopolies.

(M460) L

i62 The Free-trade Movement.

some twenty of such gigantic trusts, many of them
erected upon the exclusion of foreign competition, which
control the most extensive industries and fix prices at
monopoly rates. The sugar trust has already been
mentioned; a glass trust flourishes under the shelter of
a duty of 120 per cent on foreign window-glass, while
another trust in mother-of-pearl buttons is protected by
1400 per cent tariff against foreign competition. The
iron, copper, nickel, and tin industries are all monopolies
in the United States, and have become mines of wealth
to their proprietors. The latest of these is the tin
monopoly, which was created by the M*Kinley tariff,
not only to the great injury of the British tin industry,
but also of some other American trades.^ Minerals
could be worked at a reasonable profit in the States,
but the effect of the monopoly created by a tariff is,
that under the plea of developing the home industry
and national resources, syndicates are formed which
secure duties almost prohibitive, and enable the owners
to obtain exorbitant prices and profits.^

A further serious evil attaches to the tariff system as
regards the internal trade of a country. Tariffs are at
best a clumsy machinery for regulating trade, but their
frequent alterations make them most potent instruments
for disturbing trade and creating depressions and crises.
It is now understood in the industrial and commercial
world that steadiness is a desideratum of healthy business,
and that violent fluctuations, however created, lead only
to uncertainty and injury in the long run. The latest
tariff bill in America illustrates the action of such inter-
ference with trade. From the time it was proposed it

i"The Ruckel Company are large dealers in iron and tin. They have
just reduced the wages of their workmen by five per cent. Messrs. Sher-
man S. Jewett & Co. are among the largest stove manufacturers in the
United States. They employ in Buffalo upwards of a thousand men.
They have just given notice to their men of a reduction of wages, owing to
the increase of the duty on tin-plates, of which the firm use hundreds of
tons yearly". — Note from American Correspondent oi Pall Mall Gazette.

' The proprietor of the nickel monopoly has become a millionaire, and
has founded a Chair of Finance and Economy at Philadelphia to teach
Protection ; by the deed of gift the professor has to show how by suitable
tariff legislation a nation may keep its productive industry alive, cheapen
the cost of commodities, and oblige foreigners to sell to it at low prices. —
See Mr. Wise's Industrial Freedom, pp. 283-293 (Cassell & Co.).

Protection in other Countries. 163

created disturbance and dislocation ; speculations based
on its probable results disordered the markets, some
imports were vastly increased in anticipation of its pro-
hibitive effects, while other industries held back to await
its promulg-ation. The bill was frequently altered to
meet the demands of the representatives of different
trades.^ During" the whole period it was under considera-
tion the utmost uncertainty prevailed, business hesitated,
industry languished, and trade was stagnant. Many
interests were involved, and none could forecast the
issue. And this gratuitous injury to trade is a conse-
quence of a system which professedly organizes trade
for the benefit of the community.

While, then, various reasons can be adduced for the
maintenance of the protective system in other countries,
it is plain that the strongest impediment to its abolition
is self-interest — a principle which finds abundant illus-
tration everywhere, but which, in the case of protected
industries, is enlisted very widely in a cause economically
injurious to the community as a whole. By a mistaken
policy many industries have been started in those
countries, which can only flourish through the exclusion
of competition afforded by the tariffs ; those interested
fight therefore for the maintenance of the tariffs, and their
influence is great in the Legislature. The principle, being
admitted, gains wider application, monopolies are built
upon it, and interests are created embracing powerful
sections of the community, hence its abolition is difficult ;
strong defences are sought and plausible arguments
created on its behalf. In Great Britain the repeal of the

1 An interesting side-light is thrown upon the working of the protective
system by the indignation and protests against the Dingley Tariff in the
United States coming from Americans visiting Europe, This latest fiscal
device has not only intensified the ordinary effects of Protection, but repre-
sents the American Government as agent of a "New York Tradesmen's
League", composed mainly of tailors and milliners. The Act prohibits
Americans from bringing home more than $ioo worth of personal effects,
all excess being charged at about 60 per cent duty. The measure inflicts
annoyance and inconvenience upon some 60,000 or 70,000 American citizens
who visit Europe in the year, and is calculated to yield some _^5o,ooo excess
duty, while it entails increased expense in customs-officials, and has created
a system of spies on board ship and detectives in the Custom-house in
the interest of the so-called "Merchants' Board of Trade".— See The
Times, 19th October, 1897.

164 The Free-trade Movement.

Corn-laws was opposed by only one large interest, and
its resistance was weakened by the allies of famine and
misery which came at a critical moment to join its op-
ponents. It was a question of food and sustenance in
Great Britain which drove home the economic argument;
the like conditions do not exist in any other country.

Chapter IX.
British Agriculture and Free -trade.

The problem of the relation of our Free-trading system
to British agriculture is of such importance as to merit
separate consideration. In most countries the demand
for protective duties comes more especially from manu-
facturing industries, but in Great Britain protection has
chiefly been invoked during this century on behalf of
agriculture. The explanation is, that other countries are
for the most part self-supporting as regards food; in
this respect the case of Great Britain is exceptional. In
the United States and most of the Colonies the farmers
are Free-traders, and the Protectionists are manufac-
turers, who wish to keep out British competition. In
Great Britain the manufacturers are mostly Free-traders;
it is the agricultural interest that is most desirous of
excluding foreign competition. In 1896 our imports
were valued at ;^44 1,807, 000, of which ;£"i54,3i5,ooo,
or 35 percent, was on account of agricultural produce in
competition with British farming. The table (on page
165), from the Board of Trade returns, indicates the
nature of these imports.

Farming has been undoubtedly the least progressive
of our great national industries during the past fifty
years. In 1846 agriculture employed 3^ millions of
labourers in the United Kingdom, while in 1895 only
2^ millions found work upon the soil. Agricultural
capital, which increased up to 1879, ^^^ since fallen to
nearly the same value as in 1846. The introduction of

i895.

1896.

£ 8,966,000

^10,438,000

23,762,000

24,753,000

49,723,000

52,792,000

25,480,000

26,926,000

4,025,000

3,440,000

2,033,000

2,728,000

3,144,000

2,874,000

605,000

605,000

26,026,000

24,958,000

4,618,000

4,801,000

British Agriculture and Free-trade. 165

Imports.

Animals living (for food),

Meat (for food), ...

Wheat, Flour, and other Cereals,

Butter, Cheese, and Eggs,

Lard and Milk,

Fruit and Hops, ...

Potatoes, Onions, and other Vegetables,

Poultry and Game,

Wool (sheep and lambs),

Other Articles, ... ...

;^i48,382,ooo £is\,zis,ooo

machinery into farming, by which means two men can
do as much as three formerly, accounts for some reduc-
tion in the amount of labour; but the fact remains that
a large part of our food supply is now obtained from
abroad in exchange for our manufactured goods ; farm-
ing has become less profitable than other industries, and
has during the past twenty years tended to decline. The
question we have to consider is whether Protection would
provide a remedy for depressed agriculture.

After the repeal of the Corn -laws until about 1876
agriculture flourished, more land was brought under
cultivation, farmers prospered, and rents rose; increas-
ing population, thriving manufactures, and growing
commerce created a greater demand for agricultural
produce; the standard of living advanced considerably,
and classes who had subsisted mainly on bread and
vegetables became comparatively large consumers of
meat, milk, butter, and cheese. The repeal of the Corn-
laws did not operate injuriously to agriculture; the
thirty years which succeeded were a period of excep-
tional prosperity for the agricultural classes, and falsified
all the predictions of the opponents of Free -trade.
Between 1853 and i860 Mr. Gladstone removed the
import duties on butter, cheese, &c., and on half-
manufactured goods, and further, considerably reduced
the taxes on imported commodities, leaving only forty-
eight dutiable articles. The railway mania and crisis
of 1847 retarded progress for a time; the general up-
heaval in 1848, the year of revolutions, turned men's
minds to political rather than to social reform, and

OF TS%i '■' y- V

i66 The Free-trade Movement.

Chartism once again became temporarily a disturbing
force; but trade progressed, the harvests were good,
and the farmers had a prosperous period until about
1862, due mainly to the improved standard of living of
the industrial classes. Meanwhile food, especially wheat,
came in abundance from other lands, yet rents rose
steadily to 1873, and land values increased 27 per cent.
The cotton famine, which threw Lancashire into idleness,
checked the general prosperity somewhat, and the disas-
trous commercial crisis of 1866 marked an epoch of
severe trial for trade, yet agriculture flourished. The
impulse to foreign trade gained by the opening of our
ports, and the gold discoveries which developed Australia
gave an unwonted period of activity. Agricultural im-
ports increased during the seventies, but demand kept
pace, and, excepting corn and wool, prices did not fall
materially for some years.

In 1879, however, severe depression set in, and from
that time agriculture has not recovered. A series of
bad harvests culminated in 1879 in failure of crops, but
the more enduring causes of the decline in agriculture
are to be found in an intensity of foreign competition
previously unknown. Prices fell with the influx of all
kinds of food, rents were gradually reduced, but not
until much farming capital had been lost and farms were
going out of cultivation in some counties. It is perhaps
not remarkable that agriculturists should have turned to
the State to relieve their distress. Two facts only were
patent to them; prices had fallen to an unprofitable
level, and the importation of foreign food at low prices
was becoming immense.^ Farmers, unable to meet their
expenses or obtain sufficient relief from lower rents,
sought aid from a rise of prices, or something which
would remove the intensity of the competition which
oppressed them. They also began an agitation for a
modification of burdens upon land, that is, for a reduc-
tion of local rates. This last has been granted. It

* Estimated value of agricultural produce of the United Kingdom in 1891 :
;^222,9i5,ooo. From the same quantities, at prices of 1874, the estimated
value would be: ;^298, 997,000, showing a decline in money values of
;^76, 082,000, or 25 per cent.

British Agriculture and Free-trade. 167

cannot be doubted that the act of 1896, which made this
remission, will confer no permanent advantage upon
farmers. If rates are a deduction from rent, as has
been argued from both sides of the House of Commons,
the gain must accrue ultimately to the rent-receiver,
although this will not be accomplished until the compe-
titive principle has had time to work out the adjustment.
Of the various remedies proposed for the restoration
of agriculture none have been regarded with more
hopefulness than Bimetallism and Protection. The
former of these involves questions much too large and
intricate to be here discussed, but its special bearing
upon agricultural prices may be touched upon briefly.
Prices of agricultural produce have fallen generally,
though not equally in all the different products ; meat
has fallen least of all, while poultry has actually risen. ^
The fall in prices is not, however, peculiar to agri-
culture, it applies equally to most other articles of
general consumption. The comparison of prices by
means of the index -number system, taking forty-five
articles of ordinary use, shows that the buying power
of money as regards those articles has changed during
the last quarter of a century, so that ;£^62 will now
purchase as much as ;£'ioo would have bought of these
commodities at the former period. This means that
where money earnings have been constant their pur-
chasing power has increased about 50 per cent ; as just
stated, this applies to manufactured articles as well as
to food. Now a cause which is general, that is, one
which would act upon all prices in much the same
manner — such as an alteration in the standard of value —
would be as potent in its influence upon the prices of
articles on which the farmer spends his earnings as upon
the price of corn or other produce he has to sell. It

1 A comparison of the prices of agricultural products (1893- 1896) with the
prices which ruled (1865-1875) when they were exceptionally high, shows a
fall as follows : —

Per cent.

Per cent.

Per cent

Wheat, ...

... SO

Butter 10

Mutton, ist quality, 8

Barley, ...

... 32

Hay 16

2nd ,, 15

Oats, ...

... 25

Beef, ist quahty, x(i%

3rd ,, 20

Wool, ...

... 26

,, and ,, ... 19

Straw nil.

Cheese,...

... 15

M 3rd 28

Poultry, rise7i.

i68 The Free-trade Movement.

could only be in money-payments of rents or fixed
charges that he could reap a benefit by an alteration in
the standard. Would it affect the competition of other
corn-producing countries? Now our chief imports of
corn are from the United States, Russia, Argentina,
and Canada, and not from silver-using countries. Out
of ;^5o,ooo,ooo worth of cereals imported, only about
;;^3, 000,000 worth, that is, 6 per cent, came from silver
countries in 1895, ^^^ ^ large proportion of this was
from India. It is asserted that the divergence between
silver and gold places India at an advantage in export-
ing grain. There are, however, other special reasons
why India should be expected to become an exporter of
grain. For some forty years past the policy of develop-
ing the resources of India by British capital has been
powerfully advocated, both in the interests of the natives
and also as a means of increasing our commerce. It
was maintained that India would thus become a pro-
ducer of corn, tea, and other valuable crops, and would
yield a profitable return on the capital sunk in her
development, while she would also become a purchaser
of British manufactures. This has now been partially
achieved ; British capital flowed to India for both public
and private undertakings. Roads, railways, irrigation,
planting, and cultivation have followed. By these
means, and under a strong and capable government,
India has enjoyed peace and prosperity. The antici-
pated results have only been partially realized as yet.
But India has become an exporter of tea and of grain,
for labour there is cheap and transport is now easy ; ^
railways, steamships, and the Suez Canal (opened in
1873) put Indian produce on British markets at low
rates ; yet the wheat exports fluctuate greatly and the
average is small. Between 1872 and 1891 the export of
wheat to Great Britain rose from 394,000 cwts. to
30,000,000 cwts ; but it fell to only 7,000,000 cwts. in
1894, and owing to the triple disasters of drought,

*In 1868 the United Kingdom consumed 107,000,000 pounds of tea, of
which it obtained 100,000,000 from China and 7,000,000 from India. In
1896 the consumption was 227,000,000 pounds, of which 203,000,000 came
from India and Ceylon, and 24,000,000 from China.

British Agriculture and Free-trade. i6g

famine, and plague, was almost a nominal quantity in
1896. Without entering, therefore, upon the diffi-
culties of the currency controversy, sufficient reasons
can be adduced to show why India should tend to
become a producer of grain and a rival of the British
farmer in the market for wheat. It seems useless, then,
to look to bimetallism as a remedy for agricultural
depression. British farming is affected only in a limited
degree by the competition of silver-using countries.
Of these India is the most important, and its capacity
to send wheat to Great Britain has been determined
much more by the circumstances just narrated than by
any influence of the currency.

We turn next to the other remedy — Protection. It
is in the highest degree improbable that any statesman
will venture to propose the renewal of tariffs upon the
necessaries of life; for good or for evil Great Britain
has become dependent upon imported wheat to the
extent of more than 70 per cent of her consumption. ^
Cheap food is essential to her industrial supremacy, and
only by free importation can an adequate supply be
obtained. Under thirty years of exceptionally strong
Protection food was dear, and at the same time the
farming classes complained frequently and bitterly. It
is a remarkable fact that during these thirty years of
systematic effort to protect agriculture there were no
less than five parliamentary inquiries into agricultural
distress; and at those times, we read, both operatives
in towns and agricultural labourers were half-starved,
workhouses were crowded, farmers were ruined in
numbers, and the burden of poor-rates was overwhelm-
ing. Other causes contributed to the distress, but the

1 For the Year 1895 the Wheat

Wheat Imported

1893-1895.

Supply was :

From

Bushels.

From

Per cent

United Kingdom,

... 51,000,000

Russia

... i6-6

United States,

... 87,000,000

Other European countries, 47

Russia,

... 46,000,000

United States,

... SO'3

Argentina,

... 23,000,000

Canada,

- 1*0

India

... 17,500,000

India,

... 6-8

Canada,

9,500,000

Argentina, ...

... no

Other countries,

... 26,500,000

Other countries, ...

..- 5'4

260,500,000

100

170 The Free-trade Movement.

evidence as to the operation of the protective laws upon
the supply of necessaries proved conclusively the failure
of the system. From 1846 to the present time there
have been but two inquiries (1880 and 1893) into agri-
cultural depression, both subsequent to a series of bad
seasons; meanwhile the country has been constantly
advancing in comfort, and the agricultural decline did
not set in until some thirty years after Protection had
been abolished.

Agriculture presents four distinct interests or aspects
for consideration: namely, as it concerns the labourer,
the farmer, the landlord, and the consumer. We have
seen that at no time has the last and largest class
(which also in a sense comprises all the rest) been so
favourably situated as at present. Low prices rule, and
the consumer's table is loaded with abundance and
variety. Let us turn to the condition of the agri-
cultural labourer, the second largest class. According
to the reports of the Royal Commission on Labour in
1894 the money- wages of agricultural labourers have
risen generally, though not equally, and least in corn-
growing districts ; but the buying power of their wages
has everywhere vastly increased, and altogether there is
an estimated improvement of about 40 per cent in the
cost of living of this class during the last thirty years ;
meanwhile free education for their children, and allot-
ments have indirectly added to the material comfort of
the labourers.^

^From an analysis of the reports upon thirty-four districts, Mr. Little
shows that money-wages (exclusive of harvesting) averaged: In 1867-1870,
J2S. yl. a week ; in 1879, 13J. gd. a week ; and 1892-1893, 135. 3<a?. a week ;
with harvesting the average wages in 1892-1893 amounted to 15J iid. a
week. The average cost to a labourer's family of five persons in flour,
butter, cheese, tea, sugar, is stated by the same authority to be : —

1860-1867= 50 •4K/.
1868-1875=48-4.
1876-1883 = 36-21.
1884-1891=31-62.
1892-1894=29-2.

Writing hi 1878, Sir James Caird (Landed Interest) estimated that the
wages of the agricultural classes had risen 60 per cent since the repeal of the
Corn-laws; and Sir Robert Giffen, in a paper on The Progress of the Work-
ing Classes, read before the Statistical Society in December, 1883, made a
similar statement.

British Agriculture and Free-trade. 171

Mr. Little, who summarized the reports of the com-
missioners, concludes: ** It is no exaggeration to say-
that in the last quarter of a century a great economic
revolution, accomplished with little aid from legislation,
has transferred to the labourers from one-third to one-
fourth of the profits which the land-owners and farmers
previously received from the cultivation of the land ".

One commissioner reports: '*The agricultural la-
bourers were never so well off as they have been during
the last few years in spite of the depression which has
caused serious distress to most of their employers ".

Another writes : * ' The labourers are better off than
they were; all things taken into account, their wages
are higher, cottages more commodious, hours of work
shorter, and resting time longer". Again: ** Women
no longer go into the fields as formerly, excepting a
little in harvest or fruit time; children are at school
getting a free education, which is an indirect addition to
wages ; young women go to service or regular occupa-
tions; and altogether the lot of the I?bouring class has
been vastly improved ; its chief drawback being the lack
of rational recreation ".

At the same time several commissioners speak of the
decline in the efficiency of the labourers. One says:
"They are less interested in their work and far less
skilled than the older men who are dropping off; modern
conditions unsettle them; they look less to agriculture
as their life work, and take less trouble to acquire the
special arts connected with it ".

Turning next to landlords, we find that during the
war (1793-18 1 5) rents were more than doubled, and the
Corn-law of 181 5 raised them still higher. Immediately
on the repeal there was a fall, but this was followed in a
few years by a rise, which continued until about 1878.^

1 Sir James Caird, in The Landed Interest, gives the following table for

England : —

1770.

1850.

1878.

Rent

Labourers' wages, ...

s. d.
13 0
7 3

s. d.

27 0

9 7

s. d.
30 0
14 0

172 The Free-trade Movement.

From that time rents have declined in amounts estimated
in different parts at from lo to 50 per cent. The fall has
been greatest in the corn districts, and in some parts of
Essex corn-land has gone out of cultivation. The fall is
least in districts where cattle, butter, and cheese form
the chief products. Over a large part of the country
the landlord -interest has suffered considerable loss:
land-owners large and small, corporations, and all insti-
tutions which were dependent upon rents, in the parts
most affected — i.e. where it has become unprofitable to
continue corn-growing — have experienced a serious dimi-
nution in their finances. This has been strongly exem-
plified in the case of some of the Oxford and Cambridge
colleges, whose revenues are derived from land in the
eastern counties, and also by instances like that of Guy's
Hospital, the income of which fell one-half from depre-
ciation in land values. Clergy dependent upon the rent
of glebe-land or upon tithes, which have fallen with the
price of corn, have suffered acutely. The Duke of Bed-
ford's book, The Story of a Great Agricultural Estate^
proves conclusively that purely agricultural outlay has
in some cases yielded only loss in recent years; and if
rent be regarded as the return to capital invested in im-
provements during the past twenty years, it has in such
cases proved a bad investment. Estates purchased about
1873, when rents were about the maximum, have been
offered for much less than half the amount given for them.

To rent-receivers, then, the fall in prices of agricultural
produce has yielded a serious loss of income, and the
contraction of the spending power of this class has
affected industries and classes which were dependent
upon their expenditure. Local employment has suffered,
and local institutions have lost some of the support
which was accorded from this source.

As pointed out, the fall in agricultural rents is very
irregular, and has been determined by the character of
the soil and products. Pastoral counties like Cheshire
have suffered little; and in many districts, where town
population has been increasing, the net result to rents of
land from all sources has been an increase, owing to the
extension of building.

British Agriculture and Free-trade. 173

While money-rents have fallen, the same general fall
in prices, which has benefited all consumers, must be set
against the fall in the matter of ordinary expenditure of
incomes derived from rent. A fact of great importance
in some cases as an off-set to the fall in agricultural
rent, is the increase in ground-rents of houses, shops,
and manufactories. The growth of population and of
industries has created a steady demand for building land,
thus augmenting the incomes derived from land which
is diverted from agriculture to building, while house-rent
has formed an increasing item of expenditure for all
classes of the population. Agricultural rental in the
United Kingdom is estimated at about ;jf 50,000,000,^ and
the ground-rental of houses, &c., at a somewhat larger
and increasing amount. Professor Marshall writes:
* ' Taken altogether the money rental of England's soil
is probably twice as high, and its real rental three or
four times as high as it was when the Corn-laws were
repealed ".2 The rise in ground-rents and the fall in
agricultural rents are both in conformity with the eco-
nomic principle that rent is a surplus profit, and varies
with price under the play of free competition. ^

1 The Reports of the Commissioners of Inland Revenue give the gross
annual value of lands (including tithes) for Great Britain as follows : —

Gross Annual Value.

Decrease.

England,

Wales,

Scotland,

Great Britain,

1879-80.

48,533.340

3,265,610

7.769.303

1893-4.

36,999,846

3,065,985

6,251,898

Amount.
11.533.494
199,625
1,517,405

Per cent.

237

6-1

19-5

59.568.253

46,317,^29

13,250,524

22*2

2 Principles of Economics, book vii., chap. 13, first edition, 722, note.

3 Under free competition rent follows, and is determined by price ; the
poorest soil worth cultivating pays no rent, since it only just recovers the
expenses of cultivation; all land superior to this "marginal land" pays
rent in proportion to its superiority. The working of the theory, however,
depends on perfect competition ; in actual fact many farmers go on paying
a customary rent, and rent is often treated in practice as if it were a first
claim upon the land and part of the cost of production, instead of a surplus
profit dependent upon price (rising and falling with it). Rent, as surplus
profit, measures what is left from average farming after all average expenses

174 T^c Free-trade Movement.

Coming last to the farmers, the only remaining interest,
profits have undoubtedly fallen with prices, especially in
districts devoted to corn ; of this the decline in agricul-
tural capital, and the failures and withdrawals from
farming, are proof only too apparent. The Report of
the Royal Commission on Agriculture, 1897, finds, that
** the farmers whose accounts have been furnished have
for twenty years past received on an average only 60 per
cent of the sum which was in past days considered an
ordinary and average profit. The chief explanation is
found in the vast influx of food from Western America,
produced under conditions of nature more favourable
than those which prevail at home, and transported by
the aid of modern science at trivial cost.^ South America
also is becoming a serious rival in wheat; in 1896 from
Argentina and Chili alone we received wheat valued at
;^2, 000,000. Rich virgin soil, a fine climate, cheap
labour, low freights, and quick transit seem to promise
indefinite and almost limitless possibilities of supply from
these new sources for many years to come.

In the matter of British corn-production the change
in the last twenty-five years has been marked. In the
year 1871 there were 11,833,243 acres under corn and
22,525,761 acres under pasture in the United King-
dom. In 1895 corn covered only 8,865,338 acres, while
27,831,117 acres were devoted to pasture. The reduc-
tion was mainly in wheat, the price of which fell from
57 J. a quarter in 1872 to 22s. lod. in 1894, though it
rose again to 26^. 2d. in 1896, and to 335. 4^. in Septem-
ber, 1897. The home-grown wheat in 1895 was worth
;£'8,4oo,ooo, the imported ;£"30, 700,000. The decline of
arable land, and the increase of pasture, point to an

are paid. In practice many special circumstances modify this principle in
particular cases. The theory is very visible in the case of ground-rents,
which notoriously rise with the superiority of the site.

1 At the present time (1897) wheat comes from the United States to
London at a cost of 3J. 2d. per quarter (of 480 lbs. ), but 2s. is considered a
fair freight, and corn has been sent to Liverpool as ballast at 20 guineas for
2000 quarters ; that is, at 2%d. a quarter. To put the matter simply, the
transport of the flour in a 4-lb. loaf from the Western States of America to
London costs about one halfpenny. In his speech in the House of Commons,
i2th March, 1844, Cobden stated that the average cost of transit from Dantzig
over ten years was loj. 6d. a quarter.

British Agriculture and Free-trade. 175

important change which is taking place in agriculture.^
British farming, not for the first time, is undergoing an
experience common to all industries when new dis-
coveries and inventions modify the methods of produc-
tion and disturb either supply or demand ; something of
the nature of an agriculture revolution has taken place
since 1877, comparable in importance to that which took
place in the period of enclosures (1790-1820), or to the
transition from tillage to sheep-farming in the sixteenth
century. Manufactures have been revolutionized in
Great Britain by successive scientific discoveries yielding
new mechanical appliances or powers; each occasion
has called for some fresh adaptation, and has given a
shock to some old-established method of industry. But
while there has been dislocation there has been also
constant advance ; and the gains, not only to society
but to industry, if intermittent, have been permanent
and sure. The changes in ship-building from wood to
iron and steel, and in artificial lighting from candles to
gas and electricity, the transformations in industry
effected by steam, electricity, and chemistry will serve
to illustrate the benefits to society from the rapid ad-
vances of science. Wages have gone up, improved cir-
cumstances have followed ; new products, new modes of
transport, and fresh industries have arisen, while the
development of the engineering trades and of the iron
and coal trades has been enormous ; though these rapid
evolutions may have brought loss to some, who are
crushed out by the advance in special industries, they

^Total area of United Kingdom and Channel 13165=77,671,319.
Area under Cultivation in United Kingdom.

1 1870.

189s.

1897.

Corn, ...
Pasture,

Green crops, ...
Other crops, ...

11.755.053
22,085,295

5. 107. 135
7,550,740

8,865,338

27,831,117

4.399.949

8,514.198

8,890,092

27,924,710

4.327.568

6,726,183

Total, ...

46,498,223

49,610,602

47.868,553

During the period the largest area under corn was in 1871, under green
crops in 1871, under pasture in 1897, other crops in 1893.

176

The Free-trade Movement.

have conferred greatly increased comfort upon the
nation as a whole, and especially upon the classes of
manual labourers.

In agriculture a similar transition is going on.
Science has modified the conditions of production and
exchange very greatly during the past twenty years,
and success in this sphere of industry now demands
knowledge of the most recent scientific and business
methods, and a readiness to profit by the latest informa-
tion. It is probably due to slowness in these respects,
and to an adherence to old-fashioned ideas and methods,
that British farming has been outstripped in some direc-
tions by its younger competitors in the States and in the
Colonies, and even nearer home.

The fact must be admitted that wheat-farming has
suffered a decline in Great Britain. Notwithstanding a
temporary revival in prices, we cannot compete in cereals
with the rich virgin soils of the almost boundless plains
of North and South America. Ultimately, no doubt,
these countries will consume their own crops, but for a
considerable period we may count on large and cheap
supplies from their fertile soils, which will undersell corn
from the inferior lands in Great Britain. In 1895 there
were in the United Kingdom^ only i^ million acres
under wheat, ^ while oats occupied 4}^ million acres, and

^ The latest official figures attainable are as follows : —

Areas under Corn Crops in the United Kingdom
IN 1897 AND IN 1896.

1897 compared with

Crop.

1897.

1896.

1896.

Increase.

Decrease.

Acres.

Acres.

Acres.

Acres.

Wheat,

1,938.956

1,734.118

204,838

Barley or here,

2,213.529

2,285,933

—

72.404

Oats,

4,226,231

4.303.697

—

77.736

Rye.

89,621

88,634

987

Beans,

230,429

252.983

22,554

Peas

191,326

196,973

—

S.647

■France has 17,000,000 acres under wheat, and also imported 35,000,000
bushels of grain in 1896.

British Agriculture and Free-trade. 177

barley 2^ million acres. Cattle-rearing and dairying
are taking the place of wheat-growing. Pasturage has
increased 6 million acres since i868, and there is an
addition to cattle of 2^ millions. Horses and pigs are
more numerous, while sheep have decreased in number.
It is obviously more profitable to provide for increased
demands for meat and dairy produce than to grow corn.
But even here competition has arisen. Improved transit
brings cattle from America in greater numbers; the
tinned-meat trade, which grew up some thirty years
ago and threatened rivalry from Australia and South
America, was followed later by the discovery of a
process by which frozen mutton was shipped from New
Zealand. 1 No fall in meat, however, took place until
1884. It was feared that these imports would be a
serious blow to British farming, but the most marked
effects have been a great increase in the consumption of
meat and of trade with the Colonies, which take our
manufactures in payment for food. The cheaper and
more abundant supply of meat rendered possible a better
standard of living among some classes, while the demand
for the superior British meat has remained as strong as
ever.^ It cannot be said that foreign beef displaces
British beef, for the Royal Commission reports there is
no diminution in the absolute quantity of meat produced
in the United Kingdom ; and though the wholesale price
of British meat has declined 30 to 40 per cent, the price
of superior British meat has not fallen appreciably to
buyers in retail markets. ^

In yet another direction has the farmer found himself
tried by modern progress. Butter, cheese, and eggs to
the value of ;^26,oc)o,ooo are imported annually. The
factory system of making cheese, which was quickly
adopted in the United States, introduced a serious com-

^ Quite recently a vessel has been built for the Australian trade with cold
storage for 90,000 carcasses of sheep, besides accommodation for other cargo
and passengers.

2 Imports of meat (live and dead) into the United Kingdom have increased
from 22 lbs, per head in 1876-78 to 40 lbs. per head in 1893-95.

» The Duke of Bedford writes [Story of a Great Estate) : " A recent Blue
Book shows that the profits of the grazier are principally absorbed by the
middleman and the railways ".

(M460) M

178 The Free-trade Movement.

petition with English cheese; this was followed by the
application of the freezing process and cold-storage
system to butter, which, combined with the co-operative
system of dairying, have led to large exports from
Australia in ships specially constructed for the purpose.
The co-operative dairy system was speedily copied in
other colonies. Meanwhile in Europe, Denmark and
Sweden had turned to dairy-farming and the co-opera-
tive system of butter-making with great success. These
countries have adopted the most recent improvements in
the methods of production and in the organization of the
sale, with the result that they are underselling Great
Britain in her own markets. Butter worth ;£"6, 250,000
came from Denmark alone in the year 1896. At the
International Congress on Technical Education, held in
London in June, 1897, Sir William Windeyer of New
South Wales read a paper in which the following
remarks occur: —

"As a visitor to England I have been somewhat
surprised at the absence amongst English farmers of
that co-operative organization in the dairying industry
which is so conspicuous amongst the farmers of New
South Wales, and which enabled the Australian Colonies
in 1896 to send you, at a profit to themselves, 17,000
tons of butter; whilst the dairying industry of England
seems to me to be languishing for want of the diffusion
of that scientific teaching of the best methods of pro-
ducing a uniform quality of butter which has given
Denmark and other countries so large a control of the
English market ".1

This extract points to one serious cause of the depres-
sion in British agriculture, namely, that it is falling
behind other countries in scientific and technical know-
ledge and in business organization. Whilst farming is
being conducted in other countries on the most modern
business principles, and with the utmost skill in the
application of science and economic methods, it is being

1 In 189s there were 155 butter and cheese factories in Victoria, which
exported 21,000,000 lbs. of butter. The Government has given no bonus
since 1893-94, but the butter may be stored in the Government refrigerating
works free. There is a bonus on exported cheese of 3^/. a lb.

British Agriculture and Free-trade. 179

pursued in England far too much on the old traditional
lines. British farmers have a natural protection in the
expense of carriage from distant parts; and, with the
application of the highest science to their industry, and
of the principle of combination to the disposal of the
product, they ought to be able to hold their own in
matters like dairying against the world. There is no
remedy for this defect but progress, and it is useless to
ask for prohibition or restriction, which would only
encourage greater inefficiency. Large production has
been a great factor in the success of manufactures, and
it is secured in the matter of butter and cheese in a
country of small farmers like Denmark by co-operation.
The same system, if adopted here in conjunction with
the most approved methods of manufacture, would
secure the pre-eminence of home-made butter, for there
is a natural prejudice in favour of home products. ^

The British Dairy Farmers' Association was founded in
1866 to promote this kind of knowledge by conferences,
exhibitions, and experiments. It has established a Dairy
Institute and Dairy Farm, Schools, and Colleges, it
encourages butter factories and creameries. Yet its
representatives admit that they make converts very
slowly, and they complain bitterly of the want of
technical education and of interest among those most
deeply concerned — both farmers and labourers.

Cattle and dairy farming, supplemented by the rear-
ing of fowls, would seem to be at present the most
paying side of British farming, and in all these branches
British produce is admittedly superior to foreign pro-

1 The small French-Canadian farmers adopt the same system of co-opera-
tion for dairying and other matters. The writer, when visiting Canada,
noticed on the roadside not many miles from Quebec stone slabs projecting
from the walls in front of each little farm; on inquiry he was informed that
the peasants placed on these their cans of milk, which were then collected by
a common cart and carried to the butter factory. Contrast the economy of
this joint action with the perverse individualism of the British farmers, who
persist in making their own butter in the old-fashioned way, and finding
their own market, and also in sending their individual milk-cans to the rail-
way-station. The writer once asked a small East Anglian farmer why he
and his neighbours did not make some attempt at co-operation ; the reply
was, that ' ' he had once suggested it, but without success ; they were all
jealous of one another, and each supposed the other wanted to make some-
thing out of it ",

i8o The Free-trade Movement.

duce, while the same cannot be said of corn. It is a
question of expense and method, and improvements in
the latter will diminish the former. If Great Britain
falls behind the United States and Germany in efficiency,
or in the knowledge of chemical and other sciences, she
pays the penalty in injury to her manufactures ; the same
applies to the agricultural industry. It is necessary
that those engaged in agriculture shall be made familiar
with the best that is known respecting their art, and all
that the sciences of chemistry and mechanics, that com-
mercial and economic methods, can contribute, be re-
garded as essential to its success. The plain fact is,
that the conditions under which agriculture can be
successfully carried on have been transformed by
modern science, and the only mode of meeting the com-
petition of those who have adapted themselves to the
changed circumstances, is to adopt the same or superior
methods.

Experts in agricultural matters and in the science of
farming are loud in their lamentations over the apathy
of practical farmers, and the want of co-operation and
mutual trust which would enable them to emulate their
rivals in methods which depend largely upon union. We
read that farmers trust too much to experience, often
gained personally at much loss and labour, although it
is out of date in the presence of ever-advancing science ;
they have much manual skill, but little technical know-
ledge; only a minority avail themselves of the opportuni-
ties offered for acquiring the principles of their art.^
Labourers are not as a rule skilled except in routine
work ; they are wanting in observation and, above all, in
knowledge of the scientific basis of their work ; and they
require more training in the principles of agriculture.
Some technical agricultural schools in this country
afford encouragement by their results, but those who
attend them constitute, as yet, a very small percentage

1 A young intelligent farmer known to the writer (and son of a farmer
who was a strong Protectionist), after attending lectures given by the
County Council completely changed his practice and views, and has become
convinced that he can make farming a success, yet he cannot succeed in
inducing other farmers to attend the lectures ; a typical reply being that of
one of them, who said of the lecturer, "What I don't know he can't tell me".

British Agriculture and Free-trade. i8i

of the classes interested in the industry. When the
knowledge has penetrated so as to reach all small
farmers and labourers, market-gardeners, and allotment-
holders, there will be a revival in the affairs of agricul-
ture, and much produce now imported may be expected
to be plentifully supplied at home. In short, there is a
great consensus of opinion among experts that scientific
knowledge is more backward in farming than in other
industries, and that among the large body of practical
agriculturists the prevalent adherence to traditional
methods is adverse to the success of the industry under
the conditions of modern competition.

As a minor branch of agricultural industry, the rearing
of fowls has been much neglected in this country in
comparison with continental countries where peasant
farming prevails. There seems no reason why it should
not rank higher and form at all events a valuable supple-
ment to other branches of farming. Recent experiments
in Sussex, where fowl-farming and feeding have been
systematized, appear to prove that it has peculiar diffi-
culties where it constitutes the sole industry, but as an
addition to small dairy farms it demands more attention
than it receives. The revenue to be derived is not a
negligible quantity, since the demand for eggs in every
town and village is constant, and good prices are obtain-
able. If it pays to import eggs and poultry of the value
of ;^4,75o,ooo, it would certainly pay to raise more at
home. Facilities are now being provided by some of
the principal railways to send farm-produce to towns on
easy terms in a convenient manner and in small quanti-
ties. A century and a half ago, according to Defoe, the
rearing of geese and turkeys was a considerable industry
in East Anglia; the birds were then driven to town on
foot from remote parts of Norfolk and other eastern
counties, often in droves of a thousand or more. The
system of capitalistic farming, which began to grow up
in the eighteenth century, has driven out fowl-farming
among large farmers, who have been trained to look to
corn, cattle, and roots as their sole produce. The Corn-
laws are largely responsible for this, since they incul-
cated the doctrine that Great Britain should be self-

i82 The Free-trade Movement.

supporting as regards bread, and that the chief end of
farming should be the production of corn. Statistics of
consumption, however, prove that the demand for eggs,
fowls, and rabbits is such as would find employment for
a considerable rural population. There is no presump-
tion in arguing from the above facts that a section of
the agricultural community might find in the smaller
products a profitable adjunct to the other branches of
their industry, one which would involve no great capital
or risk, and which would at the same time satisfy a
constantly-increasing demand. The difficulties of transit
are being removed, and business organization, which
would dispose of the produce without handing over the
profits to middlemen, seems to be the chief thing want-
ing to enable considerable additions to be made to the
incomes of many small farmers from this source.

The Report of the Royal Commission on Agriculture,
issued in the autumn of 1897, gives no support to Protec-
tion as a remedy for low prices. It points out that
agricultural depression is general all over the world, and
is even felt severely in the countries which, like the
United States, are large exporters of corn. The con-
clusion of the Commission is, that for some time past
there has been general over-production of corn. Rapid
increase in the conveniences for cheap transport has
brought more distant lands under cultivation, and has
over-stimulated production, especially of wheat; and
until supply and demand have adapted themselves there
will be excess in production and unprofitable prices.
Though prices fluctuate with each year's total harvest,
or expected supply, on the whole there is little hope
of any material permanent rise in prices for the present,
in the face of the extraordinary fertility and extent of
corn-land in Argentina, and the slight cost at which she
can raise wheat and send it to Europe. The direct
remedy for the farmer is in a reduction of rent, which,
however, comes but slowly, and transfers the loss to the
land-owner; other palliatives are in the direction already
indicated. On this report Sir Robert Giffen has put
forth an interesting speculation, based upon comparative
statistics of British consumption of meat and corn. He

British Agriculture and Free-trade. 183

finds that while the consumption of meat has vastly in-
creased, that of wheat has fallen off. He concludes
that improved resources have converted bread -eaters
into larger meat-consumers, and have thus reduced the
demand for bread. The over-production of corn is thus
translated into a falling off in demand: ''cereals have
been subjected to a new indirect competition of meat".
This fact is matter of congratulation to the community,
as it bespeaks a higher standard of living, but it presses
hard meanwhile on the producer of corn. No doubt
both events have occurred, i.e. the supply of wheat is
increased from new districts, and the demand relatively
to the population has yielded to meat; in any case it is
by the adjustment of supply and demand that the price
is fixed, and the temporary conditions affecting supply
and demand have yielded a low average price.

The whole official inquiry supports the conclusion
already arrived at in this work, that in the immediate
future the success of British agriculture must be looked
for rather in the supply of superior meat, dairy produce,
vegetables, and fowls, &c. , than in the growth of cereals.

One matter concerning markets possibly calls for
regulation in the farmers' interest: this is the question
of railway rates, which are said to operate seriously to
the disadvantage of British agricultural producers. The
transit of produce from some rural parts to markets is
difficult, and the cost is in excess of that from foreign
countries, which succeed in negotiating low ''through-
rates". No doubt the railway companies find difficulties
as regards the smaller quantities forwarded, irregularity
of supply, and imperfect packing, all of which could be
removed by some system of organization and co-operation
on the part of farmers. But the grievance calls for in-
vestigation, and some arrangement by which British
industry shall not suffer to the advantage of a foreign
rival. This is probably a proper subject for Government
inquiry and intervention. It would not be a case of
artificial aid ; for the protection, if any, is on the side of
the foreigner. At all events, in the interests of British
agriculture it is necessary that the railway companies
and farming interests should combine their powers and

184 The Free-trade Movement.

arrive at some satisfactory solution. Doubtless both
would ultimately profit by such a scheme of rates and
such an organized trade as would materially increase the
facilities for placing British produce in British markets.^
Many other questions enter into the complicated pro-
blem of agricultural decline. Such are the conditions of
land-tenure, and the expense and difficulties of land-
transfer. Free-trade in produce did not bring Free-
trade in land, and in this country there are still many
obstacles attending the sale and transfer of land that do
not apply to other forms of wealth, and that do not exist
in the countries which are its rivals in agricultural pro-
duction. Competent writers on this subject have long
pointed out much-needed reforms affecting ownership,
transfer, and tenure. These should tend to direct capital
to the land as a commercial venture, and enable it to
be easily acquired by those most desirous and able to
develop it; they should give greater security to agricul-
tural capital, and stimulate various kinds of investment
that would utilize the land most profitably in different

1 By the courtesy of the secretary of the Great Eastern Railway Company,
I am enabled to state the results of an experiment commenced by that Com-
pany on ist December, 1895, for forwarding farm and dairy produce to
London and other towns at low rates. The railway company supplies boxes
of various sizes for a few pence at the stations, and charges at the rate of ^d.
for 20 lbs. weight, including delivery in town. The Company also has
collected, and distributes gratis, a list of iioo farms from which produce can
be obtained. During the thirteen months ending Christmas i8g6, the Com-
pany carried 61,412 boxes; in the eight months to end of September, 1897,
this was increased to 82,000 boxes. The contents of the boxes are valued
at an average of 7s. per box ; this gives in the last eight months a value of
;^28,70o of farm-produce transmitted by the Company direct from farmer to
consumer at a very cheap rate. The result is most encouraging, and doubt-
less co-operation and a little organization by farmers may carry the economy
and profit still further. The farmers obtain by this means about double the
price for eggs which they receive when they are collected by middlemen.
On the other hand, it should be stated that an attempt to introduce a some-
what similar system by the London & North-western Railway Company was
not successful. The Company sent out agents, who interviewed 1000 farmers,
and endeavoured to induce them to combine so as to guarantee truck-loads
of not less than 2 tons at low rates. The official report states that the move-
ment met with scant encouragement, and that (a) the number in favour of
combination was exceedingly small, {d) that more that one-half showed
absolute indifference, (c) that generally there does not appear to be any really
acute depression in the farming industry in their district, and {d} most of the
farmers did not seem to look to railway rates as a cure for any depression
there might be.

British Agriculture and Free-trade. 185

localities. Some improvements in this direction have
been effected by Lord Cairns's Act, the Agricultural
Holdings Act, the Allotments Act, and others; but these
measures have not yet accomplished that degree of free-
dom which is essential to the fullest development of the
soil. This is not the place for a discussion of these sug-
gested reforms, they can only be alluded to as essential
factors in a complete investigation into the complicated
question of the backwardness of agriculture in a country
progressing so rapidly in other directions. The tendency
of the reforms already made supports the conclusion
that it is the removal of restrictions to the free applica-
tion of capital, knowledge, and skill, and not any reim-
position of restraints, that is required to advance this
most important branch of national industry and source
of national wealth. Protection can afford no remedy,
and could only intensify the evils which existed before
its abolition.

In connection with the agricultural problem, a few
words may be devoted to the question of rural depopu-
lation, i.e, the tendency for country labourers to flock
into towns, and for urban population to increase while
rural population is diminishing. The phenomenon is
visible in all progressive countries — the United States,
France, Germany, and the Colonies — though in a less
degree than in Great Britain. Several causes contribute,
and chief amongst them that progress in science and its
applications which have enabled man to be fed at less
cost and to devote more labour to manufacturing in-
dustries. Owing to discoveries and improvements in
the methods and tools of agriculture, to the application
of machinery (steam-plough and thrasher, self-binding
reaper, &c.), fewer labourers are required to supply the
demand for food, and a large number are set free to
minister to other wants. In our own country the im-
portation of corn, and the conversion of arable land
into pasture, have had an additional effect.^ Meanwhile
the growth of manufactures and the spread of railways

^ The Duke of Bedford writes: " For every 200 acres of arable land con-
verted into pasture, we may assume that five labourers are displaced". —
{Story of a Great Agricultural Estate, p. 196.)

i86 The Free-trade Movement.

find employment at higher wages for a continually in-
creasing number. Improved education, newspapers,
post, cheap travelling, open up new possibilities and
more attractive industries to villagers, and the sons of
agricultural labourers become artisans earning much
higher wages than their parents. The railways and
police draw away many vigorous young men. Others
find employment as carters, porters, &c., in towns,
where their superior strength often displaces weaker
town-bred labour. From Mr. Booth's investigations in
East London we learn that these countrymen usually go
to places provided for them by friends in towns, and
that in the ** submerged tenth" are to be found very few
genuine country labourers. Again, modern progress has
accentuated the attractiveness of towns, and brought it
into contrast with the dulness which often characterizes
the village life of the labourers. Thus intelligent and
enterprising young men seek towns to improve their
chances in life, and to enjoy the greater interests which
towns off"er them. Further, with the growth of machine-
industry, by-employments for women and the children
of rural labourers have declined; for their daughters,
service in town is the only field, while towns provide
subsidiary employment by which the incomes of families
may be augmented.

Thus the movement of population is largely explained
by those forms of progress which have effected econo-
mies in the methods of producing food, which have
made communication easy, and which have called into
existence innumerable kinds of new industries — the ad-
vent of steam, railways, mechanical inventions, &c. — it
is one of the effects of the transition to a mechanical age
of large industry. To the labourer it means generally
higher wages and other advantages, together with the
stir and excitement of town life. Important questions
arise as to the influence of town life upon the stamina
of the nation, and its future effects, which are more
speculative. It is not improbable, however, that with
further scientific advances, especially in the direction of
applying electricity for the distribution of motor-force
and for lighting, many industries may establish them-

British Agriculture and Free-trade. 187

selves in country towns and villages, and again restore
the balance. Much has been written on the subject of
drawing the agricultural labourer back to the land. The
problem is partly one of the system of farming and of
land-tenure. Where the peasant -property system ob-
tains, the country is covered with small farms; and in
earlier times, when agriculture was the principal occupa-
tion in this country, and the peasants had large allot-
ments with their cottages, they could live in comfort
on the land according to the standard then prevailing.
But the industrial revolution has changed all that; it
has found other and more profitable employments for
labourers, it has introduced machinery into agriculture,
and farming is now an affair of large capital, large pro-
duction, and fewer labourers.

To revert to a system of small farming is not easy if
it be found desirable, and it would demand a large out-
lay upon farm premises; the only means of keeping men
upon the soil is to give them some interest in its culti-
vation, either by purchase or by hire, so that they shall
be encouraged to look to it as a means of profit and not
merely of wages. ^

The Allotments and Small Holdings Acts have done
something to foster this idea; but market-gardening,
allotment and small farming, on any considerable scale,
would demand great changes in land-tenure, and many
primary difficulties must be met in providing houses
and farm -buildings, in securing markets, and in or-
ganizing the industry on a different plan. Still, much
might be accomplished by such a system, especially on
suitable land within easy reach of a town population
affording an assured market for produce. There must
be a great potentiality of success for such a class of
agriculturalists within some zone surrounding large
towns. It has been questioned whether a century of
mechanical industry has not diverted the genius of the
British nation from agriculture; but it may be urged
that there is much versatility in the race, and its abilities

* In France 17,500,000 persons are employed in agriculture; in England,
by the census of 1891, there were 1,360,000 persons engaged in agriculture;
in the United Kingdom, 2,500,000.

i88 The Free-trade Movement.

are soon applied to that which is proved profitable; also
there is a large agricultural population still to be retained
upon the soil; and it is highly desirable for many reasons,
social as well as economic, that facilities should be made
abundant, and encouragement given to every possible
form of cultivation, which can succeed by natural
methods and the application of the fullest knowledge,
so as to obtain the maximum advantage from the culti-
vation of our own soil.

Chapter X.
The Reaction against Free -trade.

In recent years there has appeared a kind of reaction
against the Free-trade doctrine, which was so strenuously
upheld during the first thirty years following the repeal
of the Corn-laws. This seeming desire for a return to
protective legislation is manifested in various ways — by
the growth of Fair-trade societies, occasional motions in
the House of Commons of a protective character, various
proposals for measures to provide against scarcity of
food, such as bounties on land under wheat cultivation,
demands for countervailing duties against foreign boun-
ties, attacks upon Cobden and his political views, articles
dilating upon the progress of other countries, and so
forth.

Several causes have lately conspired to give a certain
vitality to this retrograde tendency. The expectations
of those who believed that an era of universal free-trad-
ing was at hand have not been realized; France and
Germany have both gone back upon the lines of national
protection ; the United States has extended and increased
its tariffs ; and most of our Colonies continue the policy
of promoting the encouragement of "infant industries ".
The apparent isolation of Great Britain in her commercial
policy has caused some wavering on the part of those
who conceive that a doctrine, if sound, must gain

The Reaction against Free-trade. 189

general adhesion. The truth of scientific doctrines is,
however, not determined by popular majorities, and still
less by a majority of countries, in each of which there
may be a large minority of the opposite opinion; the
value of such principles must rest upon evidence. Nor
is political practice always the exact counterpart of con-
viction ; a nation might be convinced of the wisdom of
Free-trade and yet hesitate to adopt it because of the
practical difficulties in dealing with the vested interests
which have been created by the existing system. In
every protective country there is a free-trading party,
but it is generally less powerful in politics than its
opponents. 1 Again, only a limited number of any com-
munity gives any time or thought to the question, fully
understands its bearings, and takes an active part in
deciding upon it as a public policy ; the majority has no
economic conviction on the subject, but is swayed by
considerations of narrower interests and by prejudices.

It cannot be said, therefore, with truth that the public
opinion of other nations is entirely adverse to Free-
trade; the utmost that can be maintained is that a
majority in each protective country is, in existing cir-
cumstances, opposed to the change. In a previous
chapter the economic and other reasons why most
nations do not adopt Free-trade are separately discussed,
and are shown to have no weight towards reversing the

^ It is a common practice to ignore this fact, and assume that the whole
of the people of France, Germany, &c., are in favour of Protection be-
cause the government has adopted it. Mr. M'Kinley's speech of February
i2th, 1891, affords an illustration of this mode of argument, though he was
constrained to admit that some Americans were Free-traders. He denounced
these as wanting in patriotism on that account. "The weight of nations
is overwhelmingly on our side. Which is right— the British Government
whose Colonies and dependencies, with two exceptions, have protective
tariffs, applicable not alone to other nations but operative against England
itself; or all the rest of the civiUzed world? Let us call over the roll of
nations. Which are for Protection? Germany, France, Italy, Spain,
Mexico, Canada, South America, Portugal, Denmark, most of Australasia,
Switzerland, Austria-Hungary, Sweden and Norway, and the United States.
Which are against Protection? England, New South Wales, New Zealand.
It will be noted that tariff for revenue only, or tariff reform, is almost
exclusively English. But how stand the people of the world on this question f
At least 430,000,000 people are m favour of Protection, while against it there
are 38,000,000 of Britons, to whom must be added those Americans, whose
numbers are not known, who, living under our flag, seem to follow another.
This is how the jury stands."

190 The Free-trade Movement.

British policy; little therefore remains to be added with
regard to that particular objection.

The reaction in Germany and France arose after the
Franco-German war; both countries previously looked
favourably towards Free-trade. Influenced by the suc-
cess of the repeal of the Corn-laws in Great Britain, and
the treaty of i860 with France, Prussia made a similar
treaty with France in 1865, and also with Britain, both
of a very liberal character. After the successful issue
of the war in 1871, Germany further imitated Britain in
finance by copying her banking system and her com-
mercial law, and by adopting a gold currency. The
expenses following upon the war, and the increased
expenditure upon armaments and naval equipments,
called for fresh revenue; meanwhile a fall in prices and
incomes, consequent on a general depression, made
demands for further taxation burdensome. A reaction
then set in ; it was found easier to raise taxes by indirect
means, and the protective system gained favour with
some classes because it appealed to their particular in-
terests or appeared to support national industry. Prince
Bismarck, who was perhaps at the time the greatest
political force in Europe, cast his influence into the Pro-
tectionist scale, and this determined the national policy
in Germany. New duties were imposed upon agricul-
tural produce and upon iron goods, machinery, railway
plant, and manufactures. The sugar industry received
special encouragement by bounties, and the nation gave
itself again to a protective policy. The successor of the
great chancellor endeavoured to return to more moderate
measures, and by commercial treaties to modify the
severity of the Protectionist reaction, and to a slight
extent he succeeded.

German example told upon her military rival France.
Similar circumstances called for great expenditure upon
military equipment and made demands for increased
taxation, and France began again to pursue a policy
inimical to Free-trade. The commercial treaty with
Great Britain was not renewed, increased tariffs were
adopted, and the bounty system for aiding the sugar
and shipping industries was strengthened.

The Reaction against Free-trade. 191

In political and social movements there has been dis-
cerned something- of an epidemic character. The action
of two powerful neighbours could not be without effect
upon Great Britain ; and, both from a tendency to imita-
tion and a desire for retaliation, a revival of protective
sentiment was awakened. The depression in British
agriculture, and the injury wrought to cane-sugar refin-
ing by the continental sugar bounties, aided the reaction
among certain classes, and a demand arose for counter-
vailing duties on continental sugar. An ineffectual
attempt was made by the British Government to induce
the continental nations to abandon their system of
bounties ; but it was not easy to throw aside a system
in which so many interests had been created under the
stimulus and practical guarantee of the State.

The Protectionist feelings in Great Britain thus excited
has adopted the form of a demand for '* Fair-trade" or
Reciprocity, and since we cannot succeed in inducing
our neighbours to abandon their policy, we are urged
to follow their example. It is clear that the revival of
Protection on the Continent is due mainly to the expense
caused by a military and aggfressive spirit, which has
led to large unproductive outlay, and that it has no
economic raison d'etre other than that protective duties
are the most convenient form of disguising the evils
which an increased burden of taxation involves.

Probably the most powerful cause of the revival of the
Protectionist feeling in Great Britain, however, is the
depression which has overtaken agriculture during the
past twenty years, and which has been indicated by
a considerable fall in prices of agricultural produce, in
rents and in farmers' profits; at all events the largest
expression of Protectionist sentiment comes from those
interested in this industry, and they are both numerous
and influential. Further, the losses incurred by land-
owners and farmers make themselves felt in their ex-
penditure, and are thus in part transmitted to other
classes — the traders and those who in various ways are
dependent upon the expenditure of the agricultural
section of the community ; hence there is a large amount
of sympathy with the sufferers. Agriculturalists look to

192 The Free-trade Movement.

a rise in prices as the only means of recovery; they
see no hope for a permanent restoration in the face of
the extensive and ever-growing competition of other
countries, and they naturally revert to the traditional
** exceptional treatment of the land", and call for
"moderate duties" and other modes of making their
industry lucrative through a rise in price.

The whole community is profoundly interested in the
problem of an adequate supply of food, and many per-
sons seem to see cause for alarm as well as regret at
the alleged decline of our oldest and largest industry.
Sentiment also attaches to agriculture in a manner
which no other industry awakens ; hence many are pre-
pared to hold that this industry should be maintained
at any cost, and that some sacrifice by the nation would
be worth making to prevent its decay. Others have
maintained that special burdens attach to land, and that
these should be met by special legislation. From many
quarters, then, arise demands for some intervention to
improve prices. The various methods suggested resolve
themselves generally into some form of protective duty,
or into changes in the system of currency. The bi-
metallic remedy does not admit of adequate discussion
in the limits of this book, nor does it properly come
within the scope of a work on Free-trade. The appli-
cation of the protective method to agriculture is discussed
in another chapter, where some of the causes of agri-
cultural depression and its remedies are set forth. It
remains only to deal with some special points which
have lately been prominently put forward.

Some advocates of Protection express great concern
as to our dependence on foreign countries for food, in
which they foresee the possibility of great disaster in
case of war. We are told that other European nations
are increasing their armaments and naval forces, and
that this constitutes a menace to the very existence of
Great Britain; should they combine against her they
could stop her supplies of provisions and starve her into
surrender in a few weeks. Other nations, it is said,
are, or can be, self-supporting; Great Britain alone is
dependent on external supplies. The remedies sug-

The Reaction against Free-trade. 193

gfested take various forms-: (a) a deliberate return to
Protection ; (b) bounties on land under corn to stimulate
the production of grain; (c) preferential treatment of
our Colonies to enable them to provide our external
supplies of food, &c.

A bounty on land under corn differs in no sense from
a protective duty except in the mode of protection. It
would amount to a tax on the community to enable land
to grow corn which cannot at present do so, and would
become an element in the cost of the corn, that is, a tax
upon necessaries. The dependence of Britain upon other
countries for food is undoubtedly a fact, but a review of
the history of the past fifty years and of our present
naval standing does not seem to give any occasion for
fear as to the failure of foreign supplies, but rather to
indicate that we are in a stronger position to secure
them than at any previous time. In no circumstances
known at present could this country feed her enormous
population of 40,000,000 people at their existing standard
of subsistence; to be self-sufficing as regards food, a
portion of the population would need to emigrate, and
of the remainder, the majority must betake themselves to
agricultural pursuits. Is the nation prepared to put
back its progress and revert to that position in order
that it may be self-sustaining, when by means of free
exchange it is able easily to maintain its vast population
in considerable comfort?

Our dependence upon other countries has a counter-
I part; if we take food from them, they take from us
manufactured goods ; they seek our products as eagerly
as we desire their grain, and in case of war they would
be no less desirous to dispose of their produce, which
would directly or indirectly reach our shores. The
decrees of Napoleon did not put a stop to the trade
between Great Britain and the Continent; French mer-
chants sent their corn to Great Britain, while French
soldiers were clad in English woollens. A world-wide
free commerce now brings us abundant and cheap food
from all quarters, and even a deficient harvest at home
causes no suffering. Many countries compete to gain
our markets for grain, and in all quarters of the globe

(M460) N

194 '^^^ Free-trade Movement.

vast quantities of corn are annually grown for British
consumption, for which no market could be found if we
ceased to provide one; and so suitable are many newly-
accessible districts for corn-growing- that there seems to
be little cause for anxiety as to the supply, provided that
Great Britain is capable of protecting the food in transit.
In the case of such an undesirable event as a war with
any country which sends us food, the rise in price would
call forth additional supplies from all other countries
capable of increasing their export. One conclusion is
very obvious — an island nation must depend ultimately
upon her naval defences ; to such a people a powerful fleet
is as essential for national existence as for the protec-
tion of commerce. We may then rest with more assur-
ance upon obtaining adequate supplies of food from
other countries than upon our own capacity to produce
them, and ironclads are more efficient for that end than
bounties on land growing corn at an economic loss.
To attempt to provide our own food-supply from British
soil would, with our present population, only precipitate
the very evil of famine the alarmists dread. France
affords an example of the folly of excessive precaution;
she spends nearly three-quarters of a million annually
to provide her own salt, for fear there should be a defi-
ciency in case of war. The greater part of this outlay
would be saved by purchasing her salt abroad.

The remaining suggestion is that the Colonies should
be encouraged by preferential duties to supply our wants.
The objections to such a course are discussed in a later
chapter. Canada has set an example of giving prefer-
ential duties to the home -country in return for the
defence she affords, and this without making any claim
for special treatment of Canadian exports : by this step
Canada will secure greater advantages from the home
trade, and we may hope to see much further development
on these lines. The Colonies may be expected to provide
a continually-increasing proportion of our food-supply.
It is highly desirable that this should be the case, and
so far as it can be promoted without any departure from
Free-trade principles it should be encouraged. But, to
a Protectionist, food from the Colonies must appear to

The Reaction against Free-trade. 195

be a very inadequate and unsatisfactory solution of the
problem of dependence. Further, the Colonies are very
remote, and whatever danger a war with European
powers could create to food for Great Britain crossing
the ocean, would apply to food coming from distant
Colonies. National defence by powerful fleets would
still be a matter of the first importance to Great Britain,
and it is to this that she is constrained to look, as much
on account of her insular position and the wide separ-
ation between the various parts of her empire as by the
necessity for securing an adequate supply of food.

It has been already pointed out that the intercourse,
relations, and interests, which are created by mutual
trading, constitute a powerful argument in favour of
peace. In every trading community a large section
becomes interested in the maintenance of markets and
supplies. It is a fallacy to start with the assumption
that hostility is a permanent attitude of trading nations,
and that nations arming for defence are necessarily
preparing for offensive operations. This is not implied
by the precautions of Great Britain and the increase of
her navy, though other nations might suspect it; why
then should it be necessarily assumed to be the object
of other nations? The old maxim, Sivis pacemparabellum,
implies that possible dangers are reduced by powerful
defences. But defences are not necessarily threats; if
so, British fleets have long threatened the peace of
Europe. The aim of a commercial nation should rather
be to encourage a better understanding between nations,
to settle international difficulties by arbitration and con-
cert, to increase the amity of nations, and decrease the
probabilities of war. Mutual economic relations, which
imply an extension of the principle of the division of
labour, mean co-operation, progress, increase of wealth.
But some risks must attend the application of this
principle, whether among nations or in communities.
For example, some 5,000,000 of people pursue their
daily avocations in the metropolis without any anxiety
as to the means by which they will be satisfied with food
and other necessaries on the morrow. They each rely
upon the co-operation of others, whose interest it is to

196 The Free-trade Movement.

serve them, and they are not disappointed. It was in
this sense that Adam Smith recognized the identity of
public and private interests. Governments should rather
seek to reduce the risks contingent upon trading and
mutual dependence than, by placing restraints upon the
operations of exchange, to lose the advantages and con-
veniences which they confer, or to diminish the good
feeling they promote.

The Protectionist reaction has received some coun-
tenance from a very different quarter. If agricultural
profits have fallen, so also have business profits (both
industrial and commercial) declined during the last
quarter of a century, and among the classes dependent
upon this source of income much discontent has arisen.
This finds ready publicity with the capitalist class.
Without very profound investigation of the causes of
the decline in profits, some of the sufferers fall in with
the suggestion offered on behalf of agriculture, that
Protection may provide a remedy by stimulating home
industry.

Various circumstances have contributed to the decline
in profits. If, as has been maintained, the chief cause
be an alteration in the standard of value. Protection can
provide no remedy. Two other factors, however, enter
unmistakably into the explanation of low profits: (i)
the great increase in the supply of capital which has kept
pace with the prosperity of the country, and which,
being more rapid in its growth than the demand, has
forced down the rate of interest; and (2) the sharper com-
petition of foreign countries in the markets formerly held
by British produce, which has sprung up of late years.

Formerly capital was saved only by the rich landed
classes from rents, and by the merchant traders. The
industrial revolution brought in new wealthy classes,
the manufacturer and dealer, to whom the term capitalist
came to be applied. These made fortunes rapidly, and
accumulated wealth. Time has wrought great changes
in this field also. The joint-stock system, banking, and
all the machinery of modern investment stimulated sav-
ing among the professional and middle classes, and
opened up new sources of income. As education and

The Reaction against Free-trade. 197

prosperity extended, capital was augmented from the
thrifty shopkeeper and artisan class; the openings for
fresh investments were made easily available to all classes
by new developments of the loaning and company system,
so that the term ** capitalist" is no longer capable of
restriction to any particular class. The joint - stock
system is tending in some industries to drive out the
private employer, and capital is brought into the reser-
voirs of trade from tiny rivulets of saving over the whole
field of industry. Two events have followed, which are
specially relevant to the present matter. Although the
field of loaning has been enlarged so as to cover the
whole industrial world, capital has increased so much
more rapidly than fresh openings for its investment that
the rate of interest has declined; and owing to the
facility with which it can be borrowed the competition
of employers of capital has been greatly intensified by an
accession to the class of controllers of industry, of men
who live, not on their own capital, but by the skilful
employment of borrowed capital. Both facts have tended
to depress profits.

Another not less potent influence in the fall of profits
is the increased knowledge and power of the working-
classes, who now, with better capacity for bargaining
and strength gained through their trade-unions, succeed
in obtaining a larger share of the product than formerly,
while legislation on behalf of labour tends to throw
greater expense upon the employer. Meanwhile keener
competition among employers hands over, in reduced
prices, an increasing portion of the commodity to the
consumers of their products, and tends to keep down
profits by ''cutting rates". On all sides circumstances
seem to have been combining to reduce ordinary profits;
fortunes are rarely made now with the rapidity of bygone
times; men have to remain longer in business, and be
content to earn a living instead of making a fortune.
While the general standard of comfort has advanced
and prosperity has been more widely diffused, capital
has suff'ered a reduction in value. The so-called de-
pression of trade in recent years would seem to be more
correctly described as a fall in the value of investments

198 The Free-trade Movement.

and capital employed in industry ; it is a genuine depres-
sion as regards capital and profits, but wages on the
whole have advanced, and goods have been cheapened.
From business men complaints of dulness in trade have
been frequent. The real fact is, that trade has been quieter
but steadier than formerly; while there have been no
periods of violent excitement and huge profits, com-
mercial crises, once frequent and very acute, have been
fewer and less disastrous in their effects during the past
twenty -five years, and the interference with industry
from these causes has been diminished. Profits, how-
ever, have steadily declined, and among the numerous
causes to which this has been attributed, our free-trad-
ing system has, without any reason, been included. If
profits were determined by Free-trade, the fall should have
commenced from its adoption, but the contrary was the
case ; profits rose and were maintained for thirty years
after 1846. The decline has taken place during the last
twenty years, and must therefore be accounted for by
causes which have made themselves felt in that period.

The other factor contributing to the fall of profits is
the competition of other countries, which has lately
become so keen and intense. On this account some
persons favour protective proposals as a species of re-
taliation or defence. Our rivals have gained a firmer
footing in neutral markets, and their rivalry has reduced
prices. Time was when Great Britain had sole command
of many markets, she was in the van of mechanical
invention, and early succeeded in spreading the products
of her industries over the globe ; but she could not hope
to retain this monopoly. There is no ** corner" in
scientific knowledge or industrial skill; other nations
are rapidly developing their powers and extending their
industries, and their commercial activity is increasing;
their competition is inevitable, and has hereafter to be
recognized and reckoned with. Its tendency is, how-
ever, to lower profits. This fact has naturally excited
some concern ; it is not the sole, nor yet the chief, cause
of the fall; profits, as we have seen, have fallen from
causes at home which are independent of foreign com-
petition. But it is the commonest of errors to mistake

The Reaction against Free-trade. 199

a part of the cause for the whole ; and since in this case
self-interest seems opposed to foreign interests, undue
emphasis is placed upon this factor. Many persons
dependent upon interest on capital have suffered from
reduced incomes without understanding the economic
grounds for the reduction ; such persons are naturally
attracted by any proposal which promises a remedy;
they cannot demonstrate the effects of that exclusion of
foreign goods from which they are told to anticipate a
revival of vigorous trade and large profits, but join in
the demand for Protection, in the vague hope that it may
resuscitate their business profits and restore the pros-
perity of a past period. There is, however, no basis for
any such expectation by the method of trade regulation.

Prediction is dangerous; but the course of events
seems to justify the inference that a low rate of profit is
likely to prevail in the future, unless the present system
of industry should undergo some very radical change.
The growth of intelligence and skill, the increased habit
of thrift, better means of communication, higher refine-
ments in the machinery of finance and commerce, all
point rather to an increase of competition and of the
forces which have been lowering profits.

Another cause of the apparent relapse towards com-
mercial restriction is probably to be found in the change
which has come over public opinion as to the proper
scope of governmental activity, and the enlarged views
now prevalent in regard to the general functions of the
State. A considerable reaction has taken place on this
subject during the past fifty years. Many duties are
now undertaken by the community which were formerly
left to private enterprise, while the active interference of
the State on behalf of the industrial classes by Factory
and Mine legislation. Truck and Shipping Acts, Com-
pulsory Education, Employers' Liability, Compensation
for Injury, and many other measures, has tended to
create a belief in the omnipotence of governments, and
has led to a more distinctly socialistic kind of legislation.
The extension of the functions of government by judicious
regulations, imposing beneficial restraints in certain
directions, has been misconstrued as a return to a general

200 The Free-trade Movement.

faith in Government control. There are, however, dif-
ferent kinds of restraints, and they need discrimination ;
one class may be compatible with freedom, and another
with its loss. It is not always perceived that the char-
acter of modern interference differs entirely from that
which was attacked by Adam Smith; that while the
intervention in former centuries imposed disabilities, the
aim of modern legislation has been to remove them, and
to secure the greater freedom of the majority by curbing
the power of minorities (whether individuals or classes);
that the protection that is secured by Acts regulating
mines and machinery is different in kind from that which
conferred a monopoly upon a favoured industry; and
that compulsory education is an interference which gives
benefits to many, while protection for native industries
takes something from all. To place restraints on
adulteration, or on the power to enslave young children
in mills, is not the same thing as to prevent a nation
from buying its food at a cheaper rate.

The problem of the proper functions of Government is
a standing topic for each generation of politicians, and
a fertile field of debate. No absolute solution is attain-
able ; much depends upon the nature of the government,
and much upon the governed. But the stage of develop-
ment, the standard of education, the material prosperity
of the nation, the degree of political freedom, the capa-
city for organization, the morality of the people, are all
factors in the problem. The meaning and nature of true
liberty is open to various interpretations ; opinions have
fluctuated from the pole of an extreme individualism,
which would leave to Government nothing beyond the
protection of life and property, to that of an advanced
and absorbing sociaHsm in which the individual is totally
merged in the citizen. The movement of public feeling
in the direction of socialistic legislation has distinctly
aided the Protectionist reaction by its exaggerated beliefs
in the power of the State to remove economic evils, and
its tendency to substitute State action for individual
enterprise, and to refer many questions to Government
which can only be ultimately resolved by the conduct of
men themselves. There is an element of confusion both

The Reaction against Free-trade. 201

as to the field in which Government intervention can
avail, and as to the characteristics of the intervention
which is beneficial ; but this confusion has, for the time,
contributed to uphold the wave of Protectionist senti-
ment.

A cause somewhat related to that last considered, and
yet differing- from it, may also have assisted the reaction.
This is the attempt occasionally made to identify the
economic doctrine of Free-trade with a general policy of
laissez-faire and with the political opinions of some of
the early advocates of Free-trade. This is unjust. Peel
certainly did not adopt Free-trade as part of a larger
measure of non-interference ; he was seriously convinced
of its specific application to the facts of the time, and he
was very earnest in his desire to reform taxation. Cob-
den's views on general politics and foreign affairs were
widely at variance with those of Peel, and they are not
germane to the question of Free-trade, though they are
often dragged in to its prejudice, as if the Free-trade
doctrine were Cobden's peculiar invention, and summed
up all his political ideas. To attack his general politics
or his business capacity is not to overthrow the validity
of his arguments against the system of protective
tariffs upon commerce.

Although, however, such a method of controversy is
illogical, it is probable that public opinion on the Free-
trade policy has been affected by the circumstance that
its chief exponents and ardent advocates, between 1839
and 1846, were mainly men engaged in manufactures,
who were personally interested in the issue of the agita-
tion, since the removal of the Corn-laws would increase
their export trade, and would also provide cheap food for
their employees; while its chief opponents were land-
owners equally interested in maintaining high rents and
high prices. Of course the true judgment upon the
merits of the case is unaffected by the interests of either,
and depends upon the effects of the policy upon the
welfare of the people as a whole. From this stand-point
the manufacturers were on the right side in advocating
Free-trade, as their opponents were equally in the right
when they supported factory legislation. It is interesting

202 The Free-trade Movement.

to note that both conflicts worked out to the advantage
of the people. The resistance of the ** Manchester
school" of politicians to factory legislation has, however,
been employed to bring discredit upon the Free-trade
measure, which they were mainly instrumental in passing,
by suggesting that it was their private interests alone
which they were pursuing in both cases.

The two questions are, however, distinct, and there
was even no absolute identity between their supporters ;
some large land-owners were Free-traders, and some
manufacturers were amongst the factory reformers ; and
it ought also to be remembered that Cobden gave it as
his opinion and desire ''that no child should be allowed
to work in a cotton-mill earlier than thirteen years of
age". Also, with whatever motives the agitation against
the Corn-laws was originated, — and there can be little
doubt that depression in the cotton trade was the fact
which first suggested it, — the movement developed into
a great national movement for a reform which benefited
most of all the poorer classes, and which exacted immense
service, devotion, and sacrifice from those who conducted
it.

The views of Cobden on India and the Colonies, and
on foreign relations generally, are no part of the fiscal
doctrine under consideration; we are not concerned with
the whole of his opinions. He doubtless had his limita-
tions; his political horizon was probably narrowed by
his experience, and by a tendency to look at public
affairs rather from a commercial point of view. There
was possibly a lack of grandeur in his political philosophy
and conceptions, quite out of sympathy with the imperial
idea, now so easy of acceptance after fifty years of colo-
nial expansion. It was difficult then to foresee the
rapid development of the Colonies, and their possible
future consolidation. Our only considerable experience
of colonization had been in America, where a policy of
intervention had entailed disastrous consequences. It
was not unnatural that with such a warning some well-
meaning persons should push to an extreme the opposite
principle of non-interference. Cobden, moreover, had
exaggerated notions of the effects of commerce in pro-

The Reaction against Free-trade. 203

ducing universal peace, and in his continual attacks on
the expense of the army and navy he seemed to forget
that it was **the strong man armed that keepeth his
goods in safety", though on one occasion he stated that
he would not object to an expenditure of ;^ioo,ooo,ooo
on a navy if Free-trade were adopted. ^ He was un-
consciously influenced by the prejudices of his class and
occupation, and though his patriotism was sincere, it
was perhaps not sufficiently comprehensive to embrace
all the important factors of national greatness. There
was not an equal breadth of view in his treatment of
questions relating to land and manufactures. He could
see the injustices relating to the one industry more dis-
tinctly than those relating to the other. But nothing of
this detracts in any degree from Cobden's treatment of
the Free-trade question. He was honest, candid, and
clear-headed ; he grasped the doctrine of free commerce
in all its bearings, and he devoted the best years of his
life to the removal of a national grievance, with a tena-
city of purpose and ungrudging self-sacrifice which
deserve the fullest gratitude of all, whether or not they
adopt his views on general politics, or join in his opti-
mistic anticipations of an era of universal peace. After
fifty years of rapid development it may be as easy to
criticize the colonial views of Cobden as it is to discern
the defects of the colonial policy of a previous century,
but this is altogether beside the question of Free-trade,
which rests for its validity upon the soundness of its
economic principles and the tests which half a century
have applied to their adoption in practice. At a time,
however, when our social institutions are being scruti-
nized with no reserve, when laissez-faire ideas are spe-
cially unpopular, and the opinions of the ** Manchester
School" find little favour, undiscriminating criticism
has succeeded in identifying the political views of this
school with Free-trade doctrines, in creating confusion
as to the real meaning of the Free-trade movement, and
in raising some doubt as to its beneficial tendencies in
the minds of those who do not clearly grasp the issue,

1 Speech at Rochdale, June 26th, 1861.

204 The Free-trade Movement.

or who have not studied the history and effects of re-
strictions upon commerce.^

Chapter XI.
Recent British Trade and Foreign Competition.

The progress in manufactures made by toreign coun-
tries, and especially by Germany and the United States,
has been so marked in recent years as to arouse concern
in some quarters about the future of British industry
and commerce. The manner in which attention is some-
times drawn to this fact seems to assume that these
countries are outstripping us in our national industries,
that their progress has been aided by their tariffs, and
that the Free-trade policy of Great Britain is somehow
responsible for their success. It is suggested that Ger-
man goods in particular are taking the place of British
in many foreign markets, and are even ** flooding our
country" to such a degree that things *'made in Ger-
many" are the chief articles of common use, and that
meanwhile our produce is being excluded from their
markets. Hence a very gloomy forecast is made as to
the future of British trading. It is necessary to examine
the value of these opinions in order to determine whether
the progress of other countries in industry and commerce
does in any way modify the free-trading position of this
country.

The questions of comparative trade in neutral markets,
and of the progress of other countries relatively to our
own, with the causes thereof, are so important as to
have elicited public inquiry ; and we have the advantage

^See •' Cobden and the Manchester School" in Mr. A. J. Balfour's Essays
and Addresses, which may be regarded as the counterblast to Mr. Morley's
eulogium on Cobden. In this essay Mr. Balfour passes many strictures
upon Cobden as a political philosopher, but fully admits all that is neces-
sary for this argument — his merit m bringing about " the change in our
fiscal policy, which was the most important work of his public life, and with
which his name will for ever be connected ".

British Trade and Foreign Competition. 205

of recent official reports and statistics on this subject.
Early in the year 1897 the Board of Trade, in response
to a request from Parliament, issued a lengthy Memo-
randum gfiving" comparative statistics of our home and
foreign trade, and those of some leading foreign countries,
and in the autumn an important Blue Book was issued
by the Colonial Department on the growth of foreign
competition in our Colonies. From these documents,
consular reports, and other public sources reliable facts
can be gathered.

The advance in manufactures made by other countries
in the last quarter of a century is indisputable : in Ger-
many the progress in population, industry, and commerce
since the consolidation of the empire has been very
great. Eleven millions have been added to the popula-
tion since 1872, and the increase has been mostly in
towns and manufacturing localities; meanwhile the
United Kingdom has increased 8 millions, France only
2 millions, and the United States 31 millions. The
population of Germany now exceeds that of the United
Kingdom by 12 millions, while the population of the
United States is estimated at 70 millions. All these
countries have now reached a much more advanced in-
dustrial position than that which they occupied thirty
years ago. It was the good fortune of Great Britain to
attain a high level in manufacturing industries at a
much earlier date; the products of her mines and fac-
tories long held the markets of the world with ease,
since she had practically no serious rival, and under the
regime of Free-trade her commerce expanded rapidly.
More recently other nations have been developing their
resources of coal and other mineral wealth, and have
been increasing their scientific knowledge and mechani-
cal skill ; and they are now well equipped as competitors
in many of the fields of manufacture and of commerce.
It is not remarkable that their relative progress should
appear rapid in comparison with that of a country which
attained industrial maturity at an earlier period, and
that it should even give rise to erroneous views as to
its real nature and magnitude, and the causes to which
it should be ascribed. It is inevitable that, at an earlier

2o6

The Free-trade Movement.

stage, growth may proceed at a greater pace, but it
does not necessarily follow that the absolute increase is
really greater, or even that it is an amount of vital sig-
nificance. If a business earning ;£'5c>oo a year increases
ID per cent, while a younger rival earning ;^5oo a year
increases 20 per cent, the absolute increase of the first
(;£'5oo) is five times the increase of the latter (;^ioo),
although the relative progress of the latter is greater.
Statistics prove that, for the present. Great Britain re-
tains her pre-eminence as the leading manufacturing
and commercial country. ^ Other countries are advanc-
ing, but as yet they have not overtaken British foreign
trade.

Value of Exports of Domestic Products per Head of
Population over Two Quinquennial Periods.^

I870-I874.
1890-1894.

United Kingdom.

Germany.

France.

United States.

I s- d.

7 7 3
6 2 II

£ s. d.

2 16 7

329

C s. d

3 15 0
3 " 4

£ s. d.
2 9 II
2 19 0

Similar Table for Domestic Imports.

CO 00
00 00

924
9 7 3

4 6 3
422

3 15 8

480

2 18 7

2 II II

From these figures it appears: (a) That the imports
and exports of the United Kingdom, per head of popu-
lation, are nearly double those of any one of the three
great progressive countries; (b) That British imports
per head have increased in money values, while the ex-
ports have fallen slightly in value in the twenty-five
years; that German exports have increased, but the
imports have diminished in the same period (a general
fall in prices has taken place since 1873, but, since it
affects all the countries, it can be ignored for purposes
of comparison); (c) The most important conclusion,

* For comparative total foreign trade see Chapter VIII.

2 "Comparative Statistics of Population, Industry, and Commerce in the
United Kingdom and some leading Foreign Countries", Memorandum
by Board of Trade, January, 1897.

British Trade and Foreign Competition. 207

however, to be drawn from the tables, is that while a
change in the magnitude of the trade is clearly going
on, Great Britain retains her leading position. Germany,
for example, with a larger population and a much
greater extent of country, exports a little more than
half as much per head as the United Kingdom, and
receives in return, as imports, less than half the amount
per head received by Great Britain.

Following up the comparison between Great Britain
and Germany, two points — (a) the trade between Britain
and Germany, and {h) their competition in neutral mar-
kets— require fuller illustration; and these two points,
as involving diiferent considerations, must be taken
separately. As to {a) we learn from the Board of
Trade Memorandum that the imports of Great Britain
from Germany between 1880 and 1895 increased from
;^24,40o,ooo to ;^27,ooo,ooo,^ while the exports of Great
Britain to Germany in the same period grew from £i6'g
millions to ;£"20*6 millions. This means that the two
nations have been doing a larger business with each
other, a fact indicative of increased prosperity to both.
That the imports and exports do not balance is a matter
of no importance, since much trade is indirect and can-
not therefore be assigned; indeed, a considerable amount
of German trade passes through Holland and Belgium.
There is also a certain amount of transit-trade which
creates discrepancies in different statistics. The figures
are sufficient, however, to dispose of the statement that
German goods are displacing home manufactures in
Great Britain, and are crushing out our industries.
The trade is mutual, each takes more from the other
than formerly. While the intercourse between the
countries has grown ''there has been no material dis-
placement of home manufactures in our home market
by Germany " ; indeed, as the Memorandum continues,
''on the figures of 1896 we seem to be increasing our
market in Germany more rapidly than Germany is in-
creasing her market here ".

By limiting the comparison to selected industries, and

* It is worth noting that of this sum sugar amounted to ;^9,393,89o.
This is bounty-paid, and is sold to Great Britain at a loss on production.

2o8 The Free-trade Movement.

by ignoring the total amount of trade, it may be made to
appear that one country is encroaching upon the indus-
tries of another, and some alarm has been created by
applications of this method. Countries, however, like
localities, specialize in their manufactures when it is
found that they can do so successfully. Special adap-
tation to circumstances enables one industry to develop
in one country, another in another. Germany has thus
made great advances in certain trades, of which dyes,
paper, chemicals, and electrical machinery are the pro-
minent examples; in these industries she has been
employing much scientific research, and has made im-
portant discoveries. Other nations purchase these com-
modities from her with their manufactures, and thus
German progress in these arts becomes a gain to the
world. To represent such new developments as injurious
to British manufactures as a whole is to misunderstand
the nature of progress as well as of trade. With every
new development, whether at home or abroad, some in-
dustries are disturbed until matters have been adjusted
to the new conditions of improved efficiency: this is a
factor in progress and not an injury to mankind.

Localization of trades on a large scale leads to
great economies in production, and yields a natural
advantage which is expressed scientifically by the Law
of Increasing Return. All the important industries in
our own country have been thus localized, and this
association of an industry with a particular district has
been regarded not only as a sign of its success, but also
as a factor contributing to its general development.
The economic advantage to the world is in like manner
much increased when the specialization is spread over
a larger area and embraces diff"erent countries. Dyes,
paper, glass, alkalies, and musical instruments have
thus come to be included among the leading industries
of Germany; but if Britain buys dyes, &c., from
Germany, she pays for them with machinery, yarns, and
other manufactured goods (which are the products of
her own specialized industries), as the figures already
quoted demonstrate, and both countries profit by the

■ui>

British Trade and Foreign Competition. 209

Countries may also go on adding to their production
of articles in general demand without necessarily en-
croaching upon one another's foreign trade. Their own
wants absorb an increasing supply, and there are also
possibilities of indefinite expansion in the demands of
other countries. The coal and iron industries of the
United States and Germany have advanced enormously
since 1870, and yet the output of Great Britain is greater
than ever.

Coal Production (Board of Trade Mem.).

Annual average,
1870-1874.

Million tons.

Annual average,
1890-1894.

Million tons.

Increase
per cent.

United Kingdom ,

France,

Germany,

United States,

120
42

180
26

73
153

SO
73 -3

I28'I

264-3

Pig-iron Produced (Board of Trade Mem.).

Annual average,
1870-1874.

Million tons.

Annual average,
1890-1894.

Million tons.

Increase
per cent.

United Kingdom,

France,

Germany,

United States,

6-4

1-2

1-8

2*2

7-3

2-0

4*9
8-1

172-2
268-2

It will be noticed that the output of the United States
and Germany has increased much more than that of
Great Britain. This is not wonderful; their industrial
development began later, and their mineral wealth is at
the base of their manufacturing progress. Whether
these countries will ultimately take the lead in manu-
factures remains yet to be seen: the probable future
seat of many industries will be affected, among other
causes, by recent scientific discoveries, such as the appli-
cation of electrical agency derived from water-power.
Both in the matter of coal and water-power the United

(M460) o

2IO

The Free-trade Movement.

States promise to become a much more formidable
rival than Germany. However, the present point is
whether our foreign trade has been injured by the
progress of other nations, and if so, whether Protection
can help to maintain our supremacy or arrest the advance
of rivals.

Following up the comparison with Germany, it is
obvious that her home industries will consume an in-
creasing amount of her coal and iron, and though her
exports have increased, there is no evidence that this
has been at the expense of the trade of Great Britain
the total amount of the iron export of Germany is about
one-fourth that of Great Britain. Yet it is growing,
and the causes and methods of this increase afford
matter for reflection.

Total Exports of Iron and Steel
Goods.

Total Exports of Machinery of

ALL Kinds.

United Kingdom,
Germany,

Million tons.

United Kingdom,
Germany,

Millions of ;^s.

1884.

1894.

1882.

1894.

'I

2-6

•9

11-9
31

142
3-9

The table shows a decline in the export of British iron
in the less highly manufactured form, and an advance
of 25 per cent in the value of exports of machinery,
which is the form involving the largest amount of
skilled labour.

Because a country is developing her natural resources,
adding to her skill and efficiency, and extending her
manufactures, it is not to be inferred that she is of
necessity driving other manufacturing nations out of the
field, for there is room for great industrial expansion in
a progressive world. No fallacy is more misleading
than that the growing prosperity of one country is
necessarily a menace or an injury to the trade of others.^

* "The sneaking acts of the underling tradesmen are thus erected into
political maxims for the conduct of a great empire. By such maxims as
these nations have been taught that their interest consisted in beggaring all
their neighbours. Each nation has been made to look with an invidious

British Trade and Foreign Competition. 211

If foreign trade is to exist at all it can only be carried on
among nations that can afford to purchase one another's
goods, that is, which have products to offer, and the
amount of their trade will be determined by their
prosperity. No trader desires his clients to be poor if
he himself wishes to attain success in business. So,
too, if nations increase their wealth by new industries,
they can afford to purchase the products of their
neighbours. Australia, when settled by industrious
whites, became a productive country and a profitable
market for British goods, and South Africa is now
undergoing a similar transformation. The prosperity
of these colonies has been reflected in that of Great
Britain. The truth, which is so obvious in the case of
new and distant colonies, loses none of its import when
applied to near and more highly-developed countries.
Since trade consists in exchange, and the capacity to
exchange depends upon the power to purchase, any
increase in this power must come from increased pros-
perity. The progress of any nation in civilization gives
rise to the demand for the products of other nations;
such we have seen to arise from the recent develop-
ment of Japan, which has created a considerable trade
with Great Britain, while in some directions the Japanese
have become competitors with British producers. It
is quite as possible to contemplate a simultaneous ad-
vance in the wealth of different nations as in that of
the different members of the same community. Jealousy
of the progress of other countries is as foolish economi-
cally as it is ineffective : we cannot stay their advances,
while if our own progress is real, we may by commerce
participate in their increased productiveness and power
to purchase our commodities.

That German progress (which is very real) has not
been inimical to the mutual relations of the two countries
is illustrated by the following table (from the Board of
Trade Memorandum), which shows the proportion of our
total foreign trade with four of the leading commercial
nations.

eye upon the prosperity of all the nations with which it trades, and to con-
sider their gain as its own loss " ( Wealth of Nations, book iv. chap. 3).

212 The Free-trade Movement.

Proportion of British Imports from

1880.
1895.

Germany.

France.

Holland.

United States.

'e^l

10*21

11-39

6-82

26*04

20*77

Proportion of British Exports

TO THOSE Countries

1880.
1895.

7-6o
9-II

6-99
614

Vd

1383
12*37

Whence we see that the relative amount of our trade
with Germany increased during- this period of fifteen
years, and that exports to Germany increased more than
imports from Germany.

Statistics relating to a particular trade, or selected
for a particular area or period, may be very misleading
if no explanation be offered of the circumstances neces-
sary for their interpretation and for a true comparison :
such an example is afforded by the wool trade between
Great Britain and Germany.

It has been pointed out as a proof of decline of the
British woollen industry in consequence of German com-
petition, that the total British exports of woollen manu-
factures have fallen in the ten years ending 1895 from
;£'273,ooo,ooo to ;£"242,cxx),ooo. In the interval German
woollen goods have been much in evidence in Great
Britain in the form of Jaeger underclothing, and also as
ready-made jackets for women, &c., whence it has been
concluded that German woollens are ousting British
products in the home market. But what are the facts?
Neglecting the decline in money values, which alone is
sufficient to explain the fall in export values, we find
that our imports of raw wool in the last twenty years
have increased from 342,000,000 to 475,000,000 lbs.;
and the employees in woollen mills from 234,000 to
297,000. Wool has become much more fashionable,
and its consumption has greatly increased at home.
French and German woollen cloths of special make, as
well as British cloth, are consumed in Great Britain,
but a large quantity of the yarn used for the manu-

British Trade and Foreign Competition. 213

facture of German worsted cloths is spun in Bradford,
and the export trade of Bradford in yarns has flourished
greatly since the German demand sprang" up. In such
matters as Jaeg^er underclothing we have a new invention
which has added greatly to the comfort of mankind; it
can scarcely be said to displace any other branch of the
woollen trade, and it has called into existence similar
industries in Scotland and England, which promise to
become permanent and increasingly successful rivals of
the German product. And while in 1895 Great Britain
received from Germany wool and woollen manufactures
valued at j^"!, 676,000, Germany received from Great
Britain wool, yarn, and manufactured woollens worth
;^5,ooo,ooo.

It should be observed that many imported articles,
such as tin-plates, sheet-metal, wire, alkali, nail-rods,
and paper, are rather the raw materials of other indus-
tries than finished manufactures ; they represent a stage
in the operations, and illustrate that mutual dependence
of nations which is daily becoming more apparent. The
quickness and cheapness of transport render it easy to
distribute the operations of production over several
countries, and to promote co-operation among nations
on a scale not possible until recent times; and such
international joint -production is one form of that
specialization in industry which adds to its total effi-
ciency. To such co-operation tariff" restrictions upon
trading only create hindrances; they place limits to the
advantages that can be realized when several countries
contribute, as each best can, to secure the maximum
utility by conducting diff'erent branches or stages of
production. We may ask, In what sense could pro-
tective duties which excluded German goods avail to
increase British industry? So far as these were effectual,
they could only yield a loss to both countries by dim-
inishing their total trade and reducing the advantages
which both gain from the higher efficiency of each in
some special direction favoured by the interchange of
goods. The fallacy has a twofold origin : it arises from
limiting the observation to special industries and ignor-
ing the total effect, and it also assumes that German

214 'The Free-trade Movement.

goods would be sent to Great Britain without an equiva-
lent in British produce.

Turning next to competition in neutral markets, there
can be no doubt that other countries (and Germany in
particular) are making great efforts to gain new markets
for their manufactures, and are displaying much enter-
prise and energy in pushing their wares both in British
colonies and in foreign lands. To all this Great Britain
can offer no resistance except the competition of her
own enterprise and efficiency: no form of Protection is
of the least avail. Great Britain is in the position of an
old-established firm which has for a long time experi-
enced little competition, but has now to encounter the
opposition of a young and enterprising rival. To retain
her predominance in such circumstances she will have
to rely upon her skill and efficiency, business capacity
and energy; she will need to be vigilant, skilful, enter-
prising, and active to meet the desires of her customers
and anticipate their wants. She can afford to neglect
no form of economy that arises from improvement or
discovery either in mechanism or in processes of manu-
facture; she must adopt the most efficient commercial
methods, and study the requirements of different
countries.

The competition of progressive countries in many
branches of manufacture is very real, and will become
more acute as each year adds to their skill and capital.
Great Britain cannot retain permanently the advantage of
her earlier start, inasmuch as there is a general levelling
up of capacity and effectiveness, and a tendency towards
assimilation of the circumstances governing both labour
and capital in progressive countries. The contest has
begun, and it will become increasingly keen in the
future. Whilst it is necessary to recognize this fact as
a comparatively new element affecting British commerce,
there is no occasion for despondency, and still less
rational would be recourse to measures of a retaliatory or
hostile character, which could only lead to further dis-
location.

As yet Germany has not encroached very seriously
upon the markets which our goods find in India and our

British Trade and Foreign Competition. 215

Colonies, though she is pushing steadily in that direc-
tion.^ The proportion of German export trade with
British possessions is, according to recent statistics : —

To India, Gennany /i to jC^S from the United Kingdom.

To Australasia, ... „ ;^i to 2"30 ,, „ „

To Canada, ... „ ;^i to ;^ii „ „ „

Total British ) y- j.

possessions, { ••• " AiiOA^o „ „ „ „

The Memorandum previously quoted concludes "that
the greater portion of the trade in non-European coun-
tries, and in British possessions everywhere, is carried
on with the United Kingdom. Germany runs us close
in some European countries, and especially in Russia
or Northern Europe, but with this exception our pre-
ponderance is manifest."

There is nothing, then, in the facts to indicate that
Germany, France, and the United States have been
assisted in their industrial development or foreign com-
merce by the protective reaction of the last twenty
years. Their progress can be traced to very different
causes, and has been attained rather in the face of dis-
advantages imposed by their tariifs and bounties, both
of which are a tax upon the whole community wherever
they are imposed. A report published in Berlin in 1882,
embodying the views of eighty-five chambers of com-
merce on the new tariff, found it ** a cause of depres-
sion", *'an injury to the working-classes", and a '* bur-
den upon national labour". In the trade with neutral
countries, tariffs (with the exception of the recent
Canadian tariff) which do not differentiate between

1 From a Foreign Office Parliamentary paper, prepared by the secretary
to the British embassy at Berlin, and published October, 1897, we learn
that in the whole of the German colonies (which have an extent of
1,000,000 square miles) the German population numbers 1803 persons, of
whom one-half are officials and soldiers, and the non-German white popula-
tion is 1778; that the cost of these colonies is estimated at ;^402,ooo, and
that since the German colonies were founded iji million German emigrants
have settled in non-German countries. The exports from Germany to her
colonies in 1896 were ^{,"337, 150, and the imports from her colonies _^230,25o.
The trade of the United Kingdom with her colonies and possessions was in
1896: imports from colonies, ;^93,2o8,ooo; exports to colonies, ;^90,650,ooo.
As German trade is practically nil in her own colonies, it naturally seeks an
outlet in British colonies and neutral markets.

3i6 The Free-trade Movement.

countries, are not an important factor in determining
the proportions of trade secured by Britain and the rival
manufacturing nations. Tariffs are obstructions in all
cases, and while commercial treaties and favoured-nation
arrangements secure small gains by their bargainings,
they may involve indirectly greater losses through their
restrictions. In the long run the competition with rivals
in foreign commerce must depend upon the methods
indicated in the Memorandum: "The commercial posi-
tion of the United Kingdom has been attained and must
be kept up by the untiring zeal and energy of the
industrial community. The work of seeking out cus-
tomers, providing commodities that customers will buy,
exploiting new markets, and elaborating new methods,
rests with the individual. What Government can do is
to facilitate the supply of accurate and carefully-collected
information."

A complaint may here be discussed, that Great Britain
has aided the competition of other countries by the free
export of her machinery ; and it has been suggested that
a prohibition of, or restraint upon, such exports would
retain the manufacture of machinery as a monopoly for
Great Britain. For example, it has been urged on be-
half of the cotton industry, that we have created rivals
in Germany and India by supplying them with British
machinery, which they now employ to the detriment of
the Lancashire trade. Scarcely anyone, however, would
be found deliberately to maintain that a country can, in
these days, reserve to itself the monopoly of any art or
process, which other countries have capacity to practise
and utilize. The scheme, moreover, has been tried, and
without success; for export duties on machinery were
levied early in the century as a kind of protection, and
with the idea of preventing the development of foreign
industry. The result was, that machines were smuggled
out ot the country, and that skilled artisans were
tempted over to other countries to make the machinery
there, and start industries which became our rivals.
Thus attempts to monopolize an industry resulted in
setting up opposition elsewhere. It was under this
system that the famous firm of Cockerill at Liege, and

British Trade and Foreign Competition. 217

others in France were founded by Englishmen. The
law which prohibited the export of instruments of in-
dustry was found to be futile, and was repealed in 1844.
Fifty years have not made it more possible to monopolize
skill and knowledge. Capital and talent flow easily to
any country, enterprise is ever seeking new openings,
and these forces only require security for their applica-
tion. Great Britain imports both machinery and ideas
from other countries at the present day; and she owes
the establishment of many of her staple industries, like
wool, silk, glass, hats, and paper, to the circumstance
that Flemings, French Huguenots, and other foreign
artisans were either invited to settle in this country, or
found an asylum here when exiled from their own land.
It is idle therefore to imagine that foreign competition
could in these days be affected by any such restraints,
though it was characteristic of the Protective period that
the attempt should be made. But what would be the
result if a measure prohibiting the export of machinery
for the cotton industry could be effective? At the present
time the manufacture of cotton-spinning machinery for
export employs about 30,000 British artisans, not in-
cluding the large number engaged in the subsidiary
industries of coal and iron. These are skilled workmen,
earning good wages in the pursuit of a lucrative indus-
try. To check this machine trade by destroying its
market would throw these men out of employment and
drive the industries to other countries, which would
eagerly seize the opportunity of developing them. The
foreign demand for machinery would be met from other
sources, our own cotton-spinning industry would receive
no new impulse, and we should only have handed over
a valuable industry to another nation by ruining it here.
If other countries are able to set up cotton-mills, nothing
that we can do will prevent them, but we can profit by
their orders for machinery. British mills may still com-
pete with the foreign mills by their superiority, or there
may be sufficient demand for the products of all, as
population and civilization are constantly increasing;
but it would benefit no branch of British industry or
commerce that an embargo should be placed upon a pro-

2i8 The Free-trade Movement.

fitable industry for which we have a special fitness, and
for the products of which there is a real demand.

Whatever inroads are being made upon British com-
merce by continental competition may be explained by
two circumstances unconnected with tariffs. The first
is the rapid advance of foreign countries in scientific
knowledge and research, together with their highly-
organized systems of technical education, which have
been developed within the last quarter of a century.
The second circumstance is the superior energy and
enterprise of their merchants and commercial agents,
who are sparing no effort in their eagerness to gain
markets for their products. On the latter subject the
recent Blue Books, dealing with foreign and colonial
trade, give very conclusive evidence. From the Austral-
asian Colonies the opinion is unanimous as to the apathy
**and indifference on the part of British traders to the
wishes of their customers and a disregard for sugges-
tions ", while ** foreigners are willing to comply with
the wishes of even small buyers". ** British manufac-
turers are unwilling to alter their patterns or styles,
their manner of packing, and their terms, or to make
concessions in their inflexible rules, and the foreign
competitor reaps the benefit." Abundant evidence of
these defects will be found also in the reports of our
consuls abroad. The British makers of tools (axes,
hammers, saws, &c.) and agricultural implements will
not, we are told, modify the styles of their strong and
heavy products, and hence the trade goes to the United
States and Germany, which offer * Might, well-finished
articles, more suitable to the circumstances, and at a
lower price". In South America the German traveller
is everywhere able to speak the language of the people,
to present samples and offer goods in terms of weight,
measure, and currency of the country. He studies the
taste and convenience of the customer in every way.
The push, initiative, and energy, and the accommodating
methods of the newer competitors are making way
against the obstinacy of English merchants, who are
less complaisant, adhere to old-fashioned methods, and
are prone to dictate to their customers the kind of goods

British Trade and Foreign Competition. 219

they should buy. The conservative element in British
commerce, which adopts **the take it or leave it" form
of business, is, according to all these authorities, a factor
favourable to foreign competitors. British commercial
travellers able to speak the language of foreigners are
few, while Germans are producing trade -lists even in
Japanese and Chinese.^

The other serious charge against British industry is
that it is not keeping pace with continental countries in
the application of science to industrial ends, and that
the technical training of our workmen is inferior. In
some departments of chemistry and electrical engineer-
ing, we are told that continental nations are far in
advance of Great Britain, and that we must go now to
Germany or the United States for the latest appliances
and the best machinery for certain purposes. A Com-
mission of Inquiry by British experts brings home a like
complaint against our inferior equipment in science, and
the smaller esteem in which scientific research is held
by our manufacturers. Trained experts are largely em-
ployed at great cost by foreign manufacturers in their
works, and the highest scientific knowledge is thus
devoted to their service. Sir Henry Roscoe states, for
example, that **he visited a colour works near Frank-
furt where 100 trained chemists were employed, many
of whom had devoted years to original research with a
view to making discoveries. One of these men, who
received ;£"iooo a year, had worked for several years
without producing any result, but' eventually made a
discovery which repaid the firm ten times over, and
placed an entirely new branch of manufacture in their
hands." Nothing of this kind is to be found in Great
Britain.^

Public and private encouragement of research as a
commercial speculation is asserted to be a chief factor
in the success of these continental industries. This
competition seems to be literally a competition in the

^ See also Trade of the World, by Charles H. Gastrell.

'^ At the General Congress of Engineers held in Germany in 1896, many
British engineers expressed. themselves as surprised at the superiority of the
German processes and methods.

220 The Free-trade Movement.

application of scientific knowledge to industry, and in
business aptitude for commercial operations. The field
of Government action in these matters is limited but
important, its aid can only be indirect. The State can-
not secure markets, for purchasers must be tempted
and cannot be coerced.

It is by the encouragement of science, by technical
training, and by the diffusion of knowlege that the
Government can best aid private enterprise. It can
also help by procuring full and accurate information,
some of which is constantly being published in the
Consular reports, as to the needs of Colonies and foreign
countries, and by issuing such information in a cheap
and accessible form, — a kind of knowledge which is
especially lacking in regard to the Colonies. The con-
sular agents of other countries are said to be particu-
larly active in informing their governments on all matters
of price, fashion, demand, freights, &c., such as will
aid business men in adapting their operations to the
special circumstances of the markets for which they are
competing. Great Britain is very inadequately repre-
sented in this respect in many countries.

There are minor ways in which Government can assist
trade, as by relaxing administrative rules where they
impede some desirable end, and where the modification
would conflict with no established principle. The follow-
ing case will illustrate this : — Alcohol is taxed for revenue
in this country, and whether it is imported or home-
produced there is no drawback on its consumption for
scientific purposes. In Germany, however, the duty is
reduced to a trifling sum in such circumstances, the con-
sequence being that is. will purchase as much pure alcohol
/or experimental purposes in Germany as 6^. 6^. in Great
Britain, to the manifest advantage of chemical research
in Germany. Other examples may be found where the
working of an inflexible administrative rule operates so
as to sacrifice a greater good for the sake of depart-
mental convenience or stereotyped system.

Sensational alarms as to the decay of British industry
and commerce have been seen to be baseless, but suffi-
cient ground exists for anxiety that the nation should

British Trade and Foreign Competition. 221

realize the nature of the competition to which it will in
future be subjected, and that it should recognize its own
defects. Continued success has a tendency to dull effort,
while competition sharpens it by enforcing- the need for
alertness and energy.

There are other dangers to our trade and manufactur-
ing supremacy which originate nearer home. These
are the industrial conflicts that from time to time check
production, paralyse industry, and dislocate the export
trade, thus giving an opening to foreign competitors.
The complete stoppage of a great industry, such as coal
or ship-building, or the interference with trade caused
by a vast railway or dock strike, or an engineering dis-
pute, presents far more serious difficulties and grounds
for concern than the competition with foreign skill and
energy. These conflicts, when they reach the stage of
industrial warfare, are a calamity of the first magnitude;
they inflict suffering and loss at home, and not infre-
quently end by losing the foreign market and handing
it over to a rival producer. No other country has suf-
fered so disastrously from these industrial wars as Great
Britain, though their tendency has been seen in the
United States, Belgium, and even in Australia. This
is not the place to discuss the remedies, but the import-
ance of the subject cannot be overrated in its bearing
upon trade and foreign competition. A break in con-
tinuity of supply may be fatal to a business connection.
The complexity of modern trade is so vast and delicate
that large issues depend upon the steady working of its
machinery. The economic aspects of industry are as
vital as the strictly scientific and technical. The losses
to the nation incurred by these struggles of labour and
capital are apt to be lost sight of in the heat of a conflict.
The dangers from this quarter are only to be averted by
the exercise of great forbearance, and by an appeal to
the common-sense of those directly concerned. If British
industry be made thoroughly efficient, it may hold its
ground against the world, but both workmen and em-
ployers cannot be too fully impressed with the fact that
their skill, ingenuity, and industry are now pitted against
those of the most intelligent and progressive nations in

222 The Free-trade Movement.

the same classes of employment, and that there is no
form of Protection which can avail them in the struggle
for superiority.

Yet one other complaint against foreign competition
remains to be considered. It is said that the products
of foreign ** sweated labour" compete unfairly with those
of English labour and tend to drive them out of the
market. It is difficult to come to particulars, and
identify the kind of commodity which can be properly
labelled ** sweated" in our imports. So many circum-
stances control the rates of wages and standards of
living in different countries that a common standard for
comparison cannot be obtained. The corn exported
from India is raised by labour paid at only a fraction of
the British rate, and yet it cannot be termed sweated ;
it is the rate customary in a backward and populous
country among natives apparently contented with their
standard of living. The same objection might be raised
to the importation of Turkey and Persian carpets in
competition with Axminster, &c. It is inevitable that
so long as the conditions of life and production are so
various there can be no uniform standard of wages over
the whole globe, and that a cheap article by no means
implies a sweated industry. In like circumstances higher-
paid labour is the more efficient, and can easily maintain
its ground. In Great Britain wages and efficiency have
advanced together. The best-paid labour is found in
the superior factories and shops, and inferior workmen
gravitate to the lower class of workshops. British
miners show a larger output per hour than lower-paid
workmen on the Continent, and British workmen boast
that their production is greater than that of lower-paid
labour abroad. It may be taken as an established fact,
that sweated labour will not permanently compete with,
and undersell better-paid labour in the production of the
same class of goods; nor will inferior goods drive out
superior if the capacity to purchase be not diminished ;
indeed the converse of this statement has been so widely
accepted as to have been generalized into an economic
law, with only one exception; this is money, which, as
the standard of value, occupies a peculiar position. In-

British Trade and Foreign Competition. 223

ferior goods may co-exist with superior when they appeal
to different classes of consumers; they are then not
really in competition at all; and goods, such as Indian
and English carpets, produced by labourers existing in
wholly different circumstances, may both find a market
owing to qualities and style peculiar to themselves ; but
it does not follow that their competition is in any sense
unfair.

The problem of the competition of British produce with
that of other countries, whether in our own or neutral
markets, is finally one oi skill and efficiency ^ of adaptation
to circumstances, and of wise economic arrangements;
but it is not a matter which Government interference or
regulation by tariffs can determine in our favour. ^

^ The seven months* strike of the engineers {1897-1898) has revealed an-
other serious danger to British industry. If the evidence which it has called
forth be true, the restraints imposed by trade-unions upon the efficiency of
labour in this country are able more than any foreign tariffs to destroy
British supremacy in manufacturing, and to render British labour less efficient
and more expensive in competition with the United States and Germany —
countries almost free from these ruinous methods.

The chief points alleged are, that these countries are gaining upon Great
Britain in engineering trades in consequence of the better and fuller employ-
ment of machinery and the absence of trade-union interference with the
full exercise of each man's skill and powers. In the Engineering Magazine
for December, 1897, Mr. Hiram Maxim writes: " It was only a few years
ago that any one equipping a machine-shop obtained the gn'eater part of his
metal-working machinery from England, but to-day the obsolete, awkward,
and comparatively highrpriced English tools have been completely driven
out of the market by the German-made American tools ". From a large
Russian dealer he learns that, "Formerly nearly everything came from
England, but at the present time all the rough and coarse tools we make
for ourselves. Moderately good tools come from Germany ; very fine instru-
ments of precision, such as squares, scales, micrometers, lathe-chucks, twist-
drills, &c., from America." "It may be said that the greatest bugbear in
England, the labour question, is practically non-existent among the manu-
facturers of high-class metal work in the eastern part of the United States.
I do not believe that one per cent of the highly-skilled mechanics in the great
workshops of New England belong to any sort of a trade-union." "The
pay of the American metal-worker is about one-third more per hour than
that of the English. Nevertheless a great variety of the better class of
metal work can be produced in the United States at a considerably lower
price than in England," "The American workman commences work at seven
o'clock in the morning, promptly on the stroke of the bell ; he works steadily
until twelve o'clock, recommences at one, continuing until six. On Saturdays
he leaves off at one."

Mr. A. Basil Wilson, M.I.C.E., M.I.M.E., writes to The Times:— "Ai
works in Elsass, now engaged on a contract for delivery of machinery in
Great Britain, one man receiving zy. per week of 60 hours attends to eight
machines, producing a special article largely used in spinning machinery.

224 T^^ Free-trade Movement.

Chapter XII.
Imperial Federation*

The principle of Free-trade has, within the last few
years, come up for reconsideration in a new and in-
teresting connection. The movement for the federation
of Great Britain and her Colonies in a close and firm
union which shall at once strengthen the empire in its
defences, call forth a closer sympathy between the inha-
bitants of the scattered regions of which it is composed,
and advance their industrial and commercial interests,
is one which has grown very rapidly and has been
occupying much of public thought. The grounds on
which the movement rests are political, sentimental,
and economic. Community of kindred, language, tra-
ditions, religion, and free institutions unites the Colonies
with the mother country by ties of mutual sympathy;
the possible encroachments of military and ambitious
nations impress the importance of a closer union for
common defence and security upon a nation largely
dependent upon her commerce with remote parts of an
oceanic empire; while the purely economic advantages
to Great Britain and her Colonies to be gained by in-
creased trading are in themselves sufficient to furnish
an argument for any practicable form of union which
will promote those advantages in the interests of all.
The idea of forming some kind of federation has taken
strong hold of the popular imagination, and the problem
seems to be coming within the range of practical politics.
It is a hopeful sign for peace and the development of

Each machine completes one artiale in 2 Ji hours; the wages of the attendant
come therefore to approximately i}^cl. a piece. In this country, making the
same article one man works 54 hours per week, and attends to one machine
only, thereby naturally turning out the article at a very much enhanced price."
Free-trade cannot guarantee to a nation advantages which may not be
destroyed by other causes. If the supremacy of British labour yields to that
of other countries, it is obvious to what causes it will be due, and for this
there is no remedy in any kind of Protection. Great Britain is dependent
upon foreign markets for the sale of her goods; if her efficiency declines, her
exports must decline also.

Imperial Federation. 225

free institutions. The question is, on what basis the
desired consolidation of the empire can be secured, and
whether it is possible at all upon purely commercial and
fiscal lines.

It has long been a dream of some statesmen that a
Customs Union, or common system of taxation of imports,
might at some distant time prevail throughout the em-
pire. There are many obstacles, however, to this pro-
ject, arising out of the very different fiscal systems
adopted by the Colonies, most of which involve Protec-
tion against the mother country and one another. A
simple Customs Union based upon the existing British
system of taxation for revenue only would be an immense
advantage; but such a scheme would necessitate the
adoption of Free-trade by the Colonies, and for this they
are not yet prepared. Another suggestion, based on the
protective idea, is that Great Britain and her Colonies,
following the examples of the German "Zollverein"
and the United States, should adopt Free-trade within
the empire, with a common protective tariflf against the
other nations. This policy, as involving the adoption
of the protective principle by Great Britain, is open to
the same objections on her part as the former proposal
was on the part of the Colonies.

As a middle course, it is proposed that **some
arrangement should be made for placing trade within
the empire on a more favourable footing than that which
is carried on with foreign countries"; in other words,
that the Colonies should reduce their tariffs on imports
from the mother country, and that she in return should
place high differential duties upon all goods from foreign
countries which the Colonies are able to produce. This
policy also rests upon the application of the protective
idea in a modified form by the mother country. It will
be seen that all the schemes for commercial federation
involve difficulties in detail.

The federal sentiment is a natural evolution of the
civilization and circumstances of the nineteenth century;
it is abundantly illustrated in other countries, and its
success in the Dominion of Canada suggests its appli-
cation more widely to British Colonies. The case of

(M 460) p

226 The Free-trade Movement.

Great Britain and her Colonies presents peculiar aspects
and difficulties, but with corresponding advantages fore-
shadowed. Time has wrought great changes in the
relations of the Colonies to Great Britain and to one
another. The mercantilist conception of last century
regarded Colonies merely as a source of profit to the
mother country, to be kept in due subordination, and
exploited for its own purposes. The war of American
Independence demolished that idea, and led to a re-
action. This time public opinion went to the opposite
extreme, and on the false analogies that as ripe fruit
falls from the tree, and that as children grown to man-
hood become independent and leave their home to found
another, so it was held that Colonies, following the
example of the American States, would separate them-
selves from the mother country when they had attained
the vigour of maturity.

At the time of the Corn-law repeal, when Cobden's
hopes of universal peace as a result of free commerce
were high, this separatist doctrine was widely prevalent.
Fifty years' experience of colonial expansion, and of
unbroken good relations between the Colonies and the
mother country, has led public opinion to form a very
different and much grander conception of the destiny of
the empire. The policy which made the experiment of
placing the Colonies upon a footing of equal rights and
liberties with the mother country has been attended with
the most salutary results, and has justified the wisdom
of its principles. Responsible government was conferred
upon the larger Colonies as they grew to be capable of
its exercise — it was first accorded to Canada in 1840, to
most of the Australasian Colonies between 1850 and i86o,
and to the Cape Colony in 1872. Legislative self-rule
carried with it the control of their own fiscal arrange-
ments. The extent of this liberty is measured by the
fact that, with the exception of New South Wales, all
the Colonies adopted systems of taxation, which, though
differing in details, agreed in involving Protection against
the mother country.

Under the stimulus given to their enterprise by free-
dom, the Colonies have in fifty years made rapid progress

Imperial Federation. 227

in wealth, in population, in commerce, and in import-
ance. Their trade with the mother country is now very
considerable. Great Britain forms the chief market
for their exports of raw produce and food, and they
take a large return in her manufactures;^ indeed, the
Colonies and British possessions jointly obtain 77 per
cent of their imports from Great Britain, and less than
10 per cent from France, Germany, and the United
States together, although the States, by reason of
their easy access, naturally do the largest trade with
Canada.

Our trade with the Colonies only amounts to about
25 per cent of our whole external trade; but per head
of population their trade with Great Britain is vastly
greater than their trade with other countries. While
Germany and France each take from Great Britain less
than 10^. per head of their population, Australia imports
from Great Britain ;£^8, South Africa £;^, and Canada
£2 per head of population.

Financially also. Great Britain is deeply interested in
the Colonies, and they have found a convenient loan-
market in the mother country. The public debt of
Australia to Great Britain is about ;^20o,ooo,ooo, of
Canada some ;^6o,ooo,oc)o, while India has borrowed
;^35o,ooo,ooo, and the remaining parts of the empire
;^ 100,000,000. Thus intimate business relations of
many kinds between the various parts of the empire
constitute a bond of common interest, and a factor
favourable to consolidation. There are circumstances
outside the British Empire that indicate the desirability
of some closer political union. Germany has become a
powerful empire, and the ** Zollverein ", or commercial
union of small German states, commenced by Prussia in
1834, has been extended to comprise the whole of Ger-
many. As the United States have expanded their terri-
tory, they have maintained their fiscal union so as to
confer Free-trade over the whole of their extensive
federation, and they have sought, though unsuccess-
fully, by commercial relations to bring Canada within

1 In the year 1896 imports from the British Colonies and possessions
amounted to ;^93, 208,000, and exports to ;^9o,65o,ooo.

228 The Free-trade Movement.

the scope of their fiscal union. ^ On the other side of
the globe the movement for federation is growing, and
there is little doubt that the whole seven colonies of
Australasia will at no very distant date be brought under
some common scheme of political and financial union.
Meanwhile the federation of the South African colonies
has been postponed indefinitely by recent unfortunate
events.

Federations are formed between countries from various
motives, but in all cases of federation, projected or
accomplished, the advantages to be gained from the
extension of the area of trading have been prominent
amongst the benefits, either anticipated, or claimed as
having accrued from the union. The fact is a strong
indication of latent discontent with the system which
imposes limitations. It constitutes a kind of protest
against the unreasonable restrictions which the protec-
tive system creates, and betrays an unconscious leaning
to the Free-trade principle. . The countries joining such
unions look for some additional outlet to their export
trade, and they find it unattainable except upon terms
of mutual concession. They seek by treaties and federa-
tions to escape from the consequences of their self-im-
posed limitations. The whole of such expedients are a
condemnation of the protective principle. The policy of
Canada since 1867, and especially in the year 1897,
gives ground for hoping that intercolonial federation
will generally tend towards a more liberal commercial
policy.

The notion of an imperial inter-trading federation with
a zoUverein appeals strongly to those who feel the strain
of an ever-increasing competition with progressive rivals.
A feeling of resentment against those nations that, by
their increasing tariffs, threaten to reduce our export
trade, provokes a desire for retaliation, which seems to

1 The denunciation of their treaty with Canada in 1864 amounted to an
attempt by commercial pressure to bring her within their political union.

Imperial Federation. 229

find possible satisfaction in the exclusiveness of a British
and Colonial prohibitive tariff scheme.

It is argued that an empire on which the sun never
sets is capable of yielding almost every species of pro-
duct, and of becoming self-sustaining and self-contained.
It is also maintained that the consequent internal de-
velopment would compensate for any losses which might
be incurred by narrowing down the limits of commerce
to the boundaries of the empire, while the political and
other advantages of consolidation would count as con-
siderable assets in the balancing of accounts. It should
be observed that the latter part of this argument assumes
(what requires proof) that commercial union can be a
satisfactory basis of federation, and also that it will yield
the political and other advantages alluded to. Some
supporters of federation lay stress upon the importance
of federation for defence, and consider that fiscal
autonomy is quite consistent with such an arrangement.
On the other hand, it is argued that a policy which would
convert Great Britain and her Colonies into a self-sufficing
empire is merely a return to an earlier stage of civiliza-
tion, with an amplification of the area occupied by the
State; that it is retrogressive, and entirely antagonistic
to that principle of evolution which has developed the
commerce of modern times; and that it is opposed to
the progress of science, which, by enormously reducing
geographical distance and the cost and time of transport,
tends to make the products of the whole globe accessible
to every nation.

The common proposal is, that Great Britain shall meet
the Colonies half-way and effect a compromise by placing
differential duties upon the goods of other countries, in
order to give preferential trade to the Colonies, in return
for which they are to reduce their tariffs on British
goods.

Now British trade with the Colonies and India amounts
to about one-third of her total commerce with foreign

230 The Free-trade Movement.

countries. From the United States alone we took
goods to the value of 106^ millions sterling in 1896,
an amount equal to our imports from the whole of the
Colonies (93)^ millions in 1896), although the proportion
of trade with the United States has been diminishing,
while that with the Colonies has been increasing. The
total of British imports in 1896 amounted to ;^44 1,808, 904.
The effect therefore of this proposal would be to tax
75 per cent of our imports, in the hope that these may
be ultimately supplied from colonial instead of foreign
sources. This would raise the price of these commodi-
ties to all British consumers, who would accordingly
suffer loss, and it would be equally disastrous to British
industry by raising the cost of raw materials. A further
effect would be to reduce our exports to those foreign
countries, and to injure the industries which manufacture
those exports. As an act of commercial warfare, dis-
ordering trade and damaging foreign industries, it would
call forth unfriendly feelings, and perhaps even acts of
political hostility. The tendency of modern times has
been by foreign trade and exchange to increase mutual
dependence, friendly intercourse, and good relations.
Many of our industries depend upon other countries for
their half- manufactured materials, while they find in
those countries the largest markets for their finished
products. The complexity which has grown up in manu-
facturing and trading is immense. All this established
order would be dislocated. The policy of isolation, if
achieved, would leave us equally liable to attack; and
foreign nations would have less occasion to consider us,
when their commercial interests were severed from ours,
and one of the forces making for international peace
would be removed. As regards the proposal for pre-
ferential duties, it should be remarked that, had Great
Britain in the past retaliated upon all who placed hostile
tariffs on her goods, the Colonies would have been among
the chief sufferers ; and it is unreasonable now to expect

Imperial Federation. 231

Great Britain to impose duties in their favour by which
she would incur loss, while they are free to tax her
goods and to buy in other markets. Equally difficult
is it for the Colonies to abolish their duties against Great
Britain. In fact the prime difficulty in the way of any
form of commercial union resolves itself into a conflict
of commercial interests. The Colonies are mainly pro-
ducers of food and raw materials; they send to Great
Britain vast quantities of corn, beef, mutton, butter,
cheese, &c., and it is desired that they should increase
these exports until they become our chief external sources
of supply. This form of progress, however beneficial to
the country, is in competition with British agriculture,
which desires protection against external supplies; and,
to the British farmer who believes in that means of sus-
taining his industry, it will be no consolation to know
that the supplies come from the Colonies. On the other
hand, the Colonies have nearly all adopted protective
tariffs against manufactured goods, with the aim of
establishing manufactures in their own lands. They are
committed to the principle, and the duties are in full
operation; capital and labour have been diverted to
manufactures dependent upon duties. Preferential
treatment on both sides will therefore require that the
duties imposed by the Colonies on manufactured articles
shall be reduced in order to admit the goods of the
mother country, which are already the chief competitors
of the colonial goods. Are the colonists engaged in
these fostered trades willing to make such a sacrifice, to
reduce their manufactures, and betake themselves to agri-
culture in order to improve (as it is assumed they would)
the relations of the empire?

Again, if Great Britain is to take from the Colonies
exclusively all the commodities they can produce, by
placing prohibitive duties upon like articles from foreign
countries, she must continue to pay the Colonies for
them by means of her manufactures; she will have no

a3a The Free-trade Movement.

other means of quittance, since circular trading through
other countries will be cut off or greatly hampered ; yet
it is to this method of payment that colonial manufac-
turers are opposed, so far as it interferes with their in-
dustries and profits. The difficulty of a common basis
for trading in such circumstances is a great stumbling-
block ; it has arisen out of Protection on the part of the
Colonies, and cannot be remedied by a return to Pro-
tection on the part of Great Britain, however it may be
disguised. It is not easy to reconcile the interests of
consumers and producers at home with those of manu-
facturers in the Colonies.

The Australian Colonies recognize the difficulty, and
while recently demonstrating their loyalty and attach-
ment to the mother country, some of them have, through
their premiers, declared their adhesion to Protection, and
laid stress upon the impossibility of its speedy discon-
tinuance. The remarks of Sir G. Turner, Premier of
Victoria, on this subject show no ambiguity: "Victoria
is a heavily protected colony, and I do not suppose our
people are prepared to give up Protection. . . . We
cannot afford to relinquish our duties, because we derive
two millions annually, principally from ad valorem duties."
So the Premier of South Australia: ** In South Australia
they do not believe in Free-trade; it is contrary to the
established industries, which rest upon Protection ".

Great Britain already possesses the greater part of
the colonial trade, and it is only by expansion of the
colonial mining and agricultural industries that trade
can be increased. But the colonies are not content to
grow merely in agriculture, they wish manufacturing
industries to develop, and their policy has been directed
towards this end. As time goes on, they are unlikely to
have a surplus of agricultural produce equal to our
wants, because their growing town population will con-
sume an increasing part of their agricultural produce.
In 1896 Great Britain imported wheat and flour worth

Imperial Federation. 333

nearly ;^3i,<xx),ooo, of which the Colonies supplied only
;^2, 500,000, or 8 per cent, Russia 16*7 per cent, and the
United States 55 per cent. If the Colonies are to supply
Great Britain with food and raw materials they must
alter their policy and modify their industries, they must
cease to give artificial encouragement to manufactures,
and devote themselves to the development of their
natural resources, i.e. they must gradually drop Protec-
tion, which artificially directs capital and labour towards
manufactures, and give full play to those forces which
would make naturally for a supply of the produce re-
quired by the home country.

Had they never adopted protective measures in the
desire to foster their own manufactures they would now
be supplying a much larger proportion of our wants in
food and raw materials. For with free play and open
competition it would have been only worth while to
develop the industries which were profitable without
artificial aid. It is by agriculture and mining that
their wealth has been obtained; their natural course
of development is in that direction, and it is only by
following it that they can increase their commercial
intercourse with Great Britain.

We may conclude therefore that neither Great Britain
nor the Colonies can without considerable injury to
many interests suddenly adopt the principle of prefer-
ential trading. It is the exclusive and fostering policy,
unfortunately begun in the Colonies under a mistaken
idea, which has raised impediments. If the tariffs
aimed at British manufactures be gradually modified,
more British goods will go to the Colonies and will be
paid for of necessity by colonial produce. The same
movement towards natural development will cause the
trend of colonial industry to be towards the development
of the soil, and there will be a consequent flow of capital
and labour to the land. The credit of the Colonies will
advance, and British capital will flow by preference to

'^e£SE L/er,^

^H

234 '^^c Free-trade Movement.

their safe investments. These are the forces which
incline in the direction of the desired commercial union
by natural means, and they would involve no violent fiscal
change or departure from sound principles of trading-.

Canada has indicated the line of safe procedure and
sure progress by lowering the tariffs on British goods,
and her action has excited warm reciprocal feeling in
Great Britain, which will tell upon commercial relations
and upon the development of Canadian soil.

Adoption of preferential duties by Great Britain would
amount to a departure from the principle of Free-trade,
which was adopted only gradually and after much con-
sideration, which has stood the test of long experience,
and more than fulfilled the anticipations of its effects.
It could not be without strong reasons that a policy so
deliberately developed and so successful in its issues
would be reversed. The injury to industry and to the
community at large would alienate vast numbers in the
home country and excite feelings adverse to the Union.
Neither can the Colonies be expected to abolish their
protective tariffs at once, for such a course would ruin
the industries built up by such extraneous aid, and
would raise bitter antagonism from all those adversely
affected by their abrogation.

Even the sacrifice of trade and commercial interests
might, however, be justified to secure the stability of the
empire or maintain its integrity. When the existence of
the country is threatened, or her destiny is at stake, all
considerations give place to those of national security.
But no such critical juncture has arisen, and there is
no evidence that the safety or stability of the empire
would be strengthened by exclusive trading between its
scattered parts.

To enforce a Customs Union would be a violent pro-
ceeding, which would inflict grave injury, and cause
much discontent and possible reaction. No man can see
why his particular interests should be sacrificed for an

Imperial Federation. 335

idea. Very gradual and tentative measures may possibly
lead up to the application of some common fiscal system
in time, but it can be attempted only very gradually, if
it is not to provoke strong resistance.

The federation of a group of Colonies, such as the
Australasian, with a common tariff, would be a consider-
able step towards further federation. It presents the
same difficulties on a smaller scale. The tariff of each
colony differs from others in its details, and the various
tariffs range from the revenue tariff of New South
Wales to the highly protective tariff of its neighbour
Victoria. To assimilate these systems and reduce them
to one acceptable to all is no simple undertaking; public
revenue will be affected and private interests will incur
loss by any plan which secures uniformity. To balance
these interests, and devise the most expedient system, is
a difficult task; much more so is the construction of a
scheme which will embrace an empire.

Federation on a fiscal basis seems to be impracticable,
and likely to be defeated by the resistance of the
interests concerned. Australia has declared against it
in the words, '*No hope that way; interests too weighty
against it". The Melbourne Argus y writing on behalf of
Protectionist Victoria, holds that * * federation on a Pro-
tectionist basis is outside the range of practical politics".
Some other basis, therefore, must be sought for.

So vast and various, then, are the interests involved
in any attempt at a common tariff that the project must
be indefinitely postponed. A common principle might
be adopted, that, so far as possible, the Colonies should
gradually modify their tariffs in favour of the mother
country. As Sir Wilfrid Laurier said, **She has given
all, she imposes no tariffs on our goods, and it is for us
to draw nearer commercially by seeking her markets
and the reciprocal advantages which will ensue from her
trade"; and again, '' A Zollverein must mean Protection,
and Protection is the greatest of all mistakes".

236 The Free-trade Movement.

Canada has vast territories undeveloped, and great
potentialities for the production of all the requirements
of life. There is no better market for her products than
the home country. Canada wants population, and her
chief future source of wealth is in agriculture. Great
Britain can take Canadian products, and can supply her
with labour, capital, and manufactures; this is recipro-
city in the best sense. Her premier summed up the
whole doctrine of free exchange in a sentence, **We
know that, buying more goods from England she will
buy more from us, and so develop trade, and thus
Canada will be benefited". The United States seem to
offer a nearer and more natural market, but the tariff
shuts out Canadian produce, and the States have their
own agricultural interests, which, under a Protective
system, claim first consideration. Meanwhile Canada
finds in Great Britain an easy and sure market, and
many advantages are gained by her closer union with a
strong naval power and a rich commercial country,
which offers no barriers to trade, and is able to pay
with manufactures which Canada can consume. Sir
Wilfrid Laurier says: ** There are parties who hope to
maintain the British Empire upon lines of restricted
trade. If the British Empire is to be maintained, it can
only be upon the most absolute freedom, political and
commercial. In building up this great empire, to
deviate from the principle of freedom will be to so much
weaken the ties and bonds which now hold it together."

Difficulties have been anticipated on account of the
commercial treaties made by Great Britain with Belgium
in 1862, and with Germany in 1865. These have pro-
perly been denounced as inconsistent with the fiscal
freedom which the Colonies have long enjoyed, and as
involving results never contemplated. Further, by this
step no injustice is done to those countries, since a like
reduction of tariffs is offered by Canada to them on the
same terms as to Great Britain. If they accept, it will

Imperial Federation. 237

be a step in the direction of Free-trading, and can only
help forward a more general adoption of the principle.
The denunciation of the treaties is perfectly in harmony
with the spirit of Free-trade.

There is yet another argument. The Colonies owe
something to Great Britain for what they have cost her
in the past. The great war of the eighteenth century
for colonial expansion ended in the possession of Canada
and other vast territories, which have become the fields
for British emigration, and the home of English-speaking
people living under her free institutions. The existence
of the Colonies is mainly due to large national outlay
both in blood and treasure. Great Britain has defended
them with her army and navy, and has protected their
commerce. They received self-government and free
institutions, and they have profited by their relation
with Great Britain, by her supplies of labour and capital,
and her open markets. In many matters they even now
influence the foreign policy of Great Britain, since in
various ways they are open to attack and injury : foreign
nations are their near neighbours, — Germans in New
Guinea, French in Newfoundland, all the European
powers in Africa, — and their contact raises many delicate
and difficult problems for the home Government. Not
only is there some gratitude due from the Colonies to
Great Britain for past services, but their future destinies
are intimately interwoven with hers. It is to the interest
of all to maintain this unity, and consolidate the imperial
strength. Self-preservation demands it, and it concerns
the future of civilization and progress.

The gift proffered by the premier of Cape Colony to
the mother country of a fully-equipped man-of-war for
imperial defence is a splendid recognition of these facts,
and that so substantial a contribution to imperial de-
fence should be voted spontaneously and unanimously by
the Cape Parliament argues well for imperial federation
on a basis of common defence and unity of interests.

238 The Free-trade Movement.

The almost simultaneous action of Canada and the Cape,
coming at a moment when the sentiment of loyalty to
the sovereign and the principle of free government which
she represents found a unique opportunity for its dis-
play, have not only intensified the sympathy between
the remote parts of the empire, but have suggested the
lines on which federation can be firmly and surely
accomplished.

It is beyond the limits of this work to discuss the
methods by which it has been proposed that imperial
federation should be carried out; but in considering the
present position of Free-trade the subject of commercial
union is necessarily discussed, since it has been sug-
gested that the federation should be made upon a com-
mercial basis, and since at the Ottawa conference on
the subject of colonial federation preferential duties by
Great Britain were advocated. The difficulties and
dangers of that course have been pointed out. There
are few, however, in the careful and tentative step taken
by Canada. The Cape policy points to the more pressing
aspect of the question. The immediate need for federa-
tion is on grounds of defence of the empire, and its
interests in every quarter of the globe. Federation, so
far as it concerns a common political policy in our re-
lations to foreign nations, and a system of representation
by a supreme council, and the duties which it should
undertake, are matters which need not wait for the
solution of the commercial question. The latter is not
insuperable, but it is a question not to be precipitated,
and many present difficulties will disappear with the
natural development of the resources of the Colonies.
Under conditions drawing them into closer relations
trade will increase, especially if the Canadian precedent
be adopted; and in time the difficulties will be so dimin-
ished that the problem may be approached in a way not
at present possible.

Free-trade was attained only late in the history of our

Imperial Federation. 239

own country. It should not be prematurely forced upon
the Colonies in their present circumstances, but its
evolution may be anticipated. Federation on any basis
must not curtail the liberty of the Colonies, and it must
interfere as little as possible with existing interests;
changes must be gradual, and must be demonstrated
to yield advantages lasting and more than sufficient to
compensate for the temporary losses they may inflict.
A guarantee for peace having been secured by a power-
ful combination, and a strong motive for increasing
intercourse having been established, a way is opened
for progress and development of resources, which will
tend to work out the problem of commercial relations.

If self-taxation be retained (and both Australia and
New Zealand seem firm on that point) a Customs Union
is not possible, and inherent differences in the conditions
of production of Great Britain and the different Colonies
render it desirable, if not necessary, that each should
arrange the details of its own tariff. Unity does not
always imply uniformity in detail, but adherence to
common binding principles, the application of which
may vary with local circumstances, and may permit of
much elasticity.

One distinction between Great Britain and the Colo-
nies is most marked. In an old and densely-peopled
country with much accumulated wealth the tendency is
to make direct taxation contribute more and more of the
revenue; in an agricultural and scattered community
living upon the produce of its labour direct taxation is
less possible, and revenue must be raised upon commo-
dities in a larger degree. The difficulty of propounding
an equitable common system for the two sets of circum-
stances is practically insurmountable.

The scheme of an Imperial Zollverein on any basis
thus appears to bristle with difficulties. But imperial
federation based on a closer political organization of the
numerous elements of the scattered empire is not a

240 The Free-trade Movement.

Utopian idea. There are indications that consolidation,
on defensive and political grounds, and on the basis of
many common interests and sympathies, is a possibility
of the near future. The fiscal problem can wait. There
have been various forms of federation in the past; but
the federation of the British Empire presents a problem
unparalleled in history. The case of a vast oceanic em-
pire has never before arisen : the magnitude of the con-
ception, the variety of the conditions, and the difference
in the character of the elements to be combined, the
peculiar and sporadic nature of the whole, all render the
problem as interesting as it is unique. But while the
circumstances are exceptional, the ideal is the natural
result of the evolution of a great empire built upon the
foundation of free institutions; and the principle of
liberty which has guided its development may encourage
us to look forward with confidence to its final consum-
mation.

Index.

Abolition of West Indian slavery, 49.
Advertisement tax, 142.
Agricultural Holdings Act, 185, 187.
Agriculture, protection for, 33, 139.
Agriculture, rents, 171-172.
Agriculture and Free-trade, chap, ix.
Allotments Act, 185, 187.
Althorpe, Lord, 48.
American Standard Oil Trust, 128.
Anti-Corn-law agitation, 9, 25, chap.

iv.
Anti-Corn-law Association, 62.
Anti-Corn-law League, 63, 6g.
Antwerp, 14, 17.
Apprenticeship Act, 15.
Ash worth, Henry, Recollections of

Cobden and the League, note 64,

74, note 89, 90.
Athelstan, 12.
Athletics, 143.
Australian Colonies, 152,
Authorized trading, 17.

Balfour, A. ]., Essays and Addresses,

note 204.
Baltic Company, 17.
Banking, 140.
Bank of England, 55.
Bedford, Duke of. Story of a Great

Agricultural Estate, 172, 177, note

185.
Bentinck, Lord Charles, 89.
Bergen, 13.
Bills of exchange, 16.
Bimetallism, 167-169.
Birnie, Dr., 63.
Bismarck, Prince, 190.
Board of Trade, 205-216.
Boisguillebert, 20.
Book of rates, 15.
Booth, Charles, 186.
Bounties, chap. vi. , 125.
Bowring, Dr., 63.
Bright, John, 64, 67, 76, 79, 81, 82,

83, 84. 85, 91, 93, 145.
British Agriculture and Free-trade,

chap. ix.

(M460)

British Dairy Fanners' Association,
179.

British trade and foreign competi-
tion, chap. xi.

Bruges, 13, 14.

Buccleugh, Duke of, 89.

Burdett , Hospitals and Charities, 143.

Burke, Edmund, 54.

Caird, Sir James, Landed Interest,
note 170, 171.

Cairns, Lord, Act, 185.

Calais, 14.

Cape route, 17.

Capitalist, 196.

Carlisle, Earl of, 83.

Cattle-rearing, 177.

Charities, 143.

Charles H., 15, 33.

Chartists, 70, 75, 79, 165.

Chevalier, Mons. Michel, 94.

Child, Sir Josiah, Discourse upon
Trade, 35.

Clay, Mr. William, 62.

Clemenceau, Mons., 156.

Coal industries, 138-139.

Cobden, Richard, 62, note 64, 65-68,
69, 72, 73, 76, 'jj, 80-81, 82, 83, 84,
85, 86-87, 93> 94> 9'^' ioo> 121-122,
145,153, noteij^, 201,202-203,226.

Cockerill, 216.

Coinage Act, note 104.

Colbert, Mons. J. B., 18, note 27, 155.

Cologne, 13.

Colonial system, 22-23.

Commerce, Treaty of, 94.

Commercial depression, 41-42.

Company, Baltic, 17.

Company, East India, 17, 49.

Company, Guinea, 17.

Company, Levant, 17.

Company, Russia, 17.

Comparative cost, 97, 100.

Conservative, 73.

Conspiracy Act, 15.

Consumer, agricultural, 170.

Co-operative organization, 178-179.
Q

242

The Free-trade Movement.

Corn- law Rhymes, by Ebenezer

Elliott, 75.
Corn-laws, 26,52-60,69,135, chap. iv.
Com production, 174-176.
Corn trade, 52-60.
Cotton industry, 148-149.
Countervailing duties, 128-129.
Covent Garden Theatre, 81, 84, 88.
Coventry, 47, 159.
Craft Guilds, 13.
Crime, 140.
Croker, Richard, 73.
Currency, 104, 190.
Customs or customary dues, 13.
Customs union, 225, 239.

Daily papers, 142.
Dairy Farming, 177-179.
Defoe, Daniel, 28, 181.
De Gournay, 28.
Derby, Lord, 93.
Differential duties, 129, 225.
Dingley tariff, 149.
Disraeli, Benjamin, 90, 93.
Dowell, Stephen, History of Taxa-
tion, 44.
Drummond, W. E., 80.
Drury Lane Theatre, 80-81.
Duties for export, 15.

East India Company, 17, 49.
Economics of foreign trade, chap. v.
Eden Treaty, 40.
Edinburgh Chamber of Commerce,

46.
Education Act, 142.
Edward L, 14.
Edward III., 14.
Edward IV., 15, 53.
Elizabeth, Queen, 17, 54.
Elliott, Ebenezer, 75.
Ellison, Annual Review of Cotton

Trade, note 138.
Engrossers, 16.
Evarts, Senator, 149.
Exchange, bills of, 16.
Export duties, 14.
Exports, 14-15.

Fair-trade, 121, 191.

Farmers, 170, 174-176.

Fitzwilliam, Earl, 62, 69, 82.

Flanders, 16,

Foreign competition and British

trade, chap. xi.
Foreign Office Parliamentary paper,

note 215.

Foreign trade, i8.

Foreign trade, economics of, chap, v.,

135-136.
Forestallers, 16.
Fox. W. J.. 81.
France, 92.

Free-trade, Fifty Years of, chap. vii.
Free-trade, reaction against, chap.

xi.
Free-trade and British agriculture,

chap. ix.
Free-trade and Foreign Countries,

chap. viii.
Free-trade Hall, 71, 79, 89, 93.
Free-trade Movement, 9, 12.

Gardening, market-, 187, 188.
Gastrell, Ch. H., Trade of the

World, 219.
Giffen, Sir Robert, 106, 131, note

170, 182-183.
Gladstone, W. E., 52, 89, 93, 165.
Glasgow, 62.
Gold, 16, 19, 55, 99, 104-105, 109,

165, 190.
Gold currency, 104.
Gould, Jay, 149.

Government interference, 199-200.
Gowing, R., Life of Richard Cobden,

153-
Graham, Sir James, 61.
Great customs, 14.
Great Eastern Railway, note 184.
Grenville, Lord, 56.
Grey, Earl, 80.
Ground rents, 173.
Guilds, Merchant and Craft, 13.
Guinea Company, 17.

Hamburg, 13.

Hamilton, President, 147.

Hanseatic League, 13.

Henry III., 13.

Henry VII., 16.

Henry VIII., 16, 53.

Herbert, Sidney, 88.

Heytesbury, Lord, note 51.

Holland, 18.

Hospitals, 143.

House rents, 173.

Howick, Lord (Earl Grey), 80, 85.

Hume, Joseph, 61, 71.

Huskisson, William, 26, 46-48, 49, 58.

Imperial federation, chap. xii.
Imports, 14-15.
Income-tax, 41, 50, 140.

Index.

243

Infant industries, 147, 151-153, 188,

Interc\irsus Magnus, 16.

Interlopers, 17.

Invisible exports, 106.

Ireland, 48.

Iron industries, 138-139, 149.

Italian fleets, 12.

Jaeger woollen goods, 212, 213.
Jevons, Stanley, Prof., 38, 97.
Joint-stock system, loi, 141.
Jones-Lloyd, W. S. (Lord Overs-
tone), 82.

King, Gregory, 29.
Kinnaird, Lord, 82.

Labourers, agricultural, 170-171.

Labourers, Statute of, 15.

Laissez-faire, 27 and note, 37-38,
155, 201, 204.

Landlord, agricultural, 170-172.

Land tenure, 184.

Laurier, Sir Wilfrid, 235-236.

League, The (a newspaper), 81.

Levant Company, 17.

Limited liability, 141.

Linen duties, 150-151.

List, Friedrich, National System of
Political Economy, note 122.

Little, Mr. William, 170, 171.

Liverpool, Lord, 44, 46, 48, 58.

Lloyd's Register, 126, 137.

Locke, John, 20, 29.

London, 13, 46, 83-84.

London and North-Western Rail-
way, note 184.

I-ords, House of, 56.

Louis XIV., 27.

Lowe, Joseph, State of England,

43. 56.
Lubeck, 13.

Macaulay, Lord, 89.
M'Culloch, J. R., 38.
M'Kinley, President, 148, 149, note

189.
Maine, Sir Henry, 24.
Mallet, Sir Louis, 153.
Manchester, 61, 62, 64, 79.
Manchester School, 27, 38, 201-204.
Marginal land, note 173.
Market-gardening, 187-188.
Marshall, Prof. Alfred, Principles of

Economics, 173.
Massacre, Peterloo, 61, 71.
Maxim, Hiram, note 223.

Melbourne, Lord, 60, 62, 69, 71.
Mercantilists, 18, 19-20, chap, ii.,

35, 96, 109, 125, 226.
Mercator (a newspaper), 28.
Merchant Adventurers, 16.
Merchant Guilds, 13.
Merchants of London, 46.
Methuen Treaty, 21.
Mill, J. S., 38, 152-153.
Montesquieu, Esprit des Lois, 29.
Morley, John, Life of Cobden, 66,

73, 87, 204.
Morpeth, Lord, Earl of Carlisle, 83
Mulhall, M. G., National Progress,

note 138.
Mun, Thomas, England's Treasure

by Foreign Trade, 18, 20.
Municipal Reform, 49,

Napoleon I., 42, 56, 155, 193.

Napoleon III., 94.

National debt, 43, 141.

Natural liberty, 27, 29, 36, 37, 133.

Navigation Adts, 18, 34, 44, 46 and

note, 93.
Necessaries, 141.
Netherlands, 16.
Newmarch, William, 43.
Newspaper tax, 142.
New World, 17.
Nicholson, Prof., 125.
North, Sir Dudley, Discourses upon

Trade, 95.
Novgorod, 13.

O'Connor, Feargus, 70.
Overstone, Lord (Jones-Lloyd), 82.

Parnell, Sir Henry, 49-50.

Pasturage, 177.

Paulton, W., 63, 64, 81.

Peel, Sir Robert, 26, 49-51, 52, 72,
73. 77 • 78 and note, 80, 83, 87, 90,
91, 140, 145, 201.

Penny post, 142.

Peterloo massacre, 6r, 71.

Phoenicians, 12.

Physiocrats, 27.

Pitt, William, 9, 22, 26, 40-41, 48, 58.

Poor Law, 44, 48-49.

Population, 135.

Porter, G. R., Progress of the Na-
tion, 135.

Post-office reform, 49.

Poundage, 14.

Preferential duties, 194.

Prentice, Archibald, 61, 64 and note.

244

The Free-trade Movement.

Profits, 196.

Prohibition, example of, 112-113.

Protection, 12, 35, 58, 87, 92, chap.

vi., 114, 167, 169-170, 182.
Protection and Socialism, 200-201.

Quesnay, Mons. Fran9ois, 27.

Railways, 137.

Railway rates, 183-184, note 184.

Rates, book of, 15.

Real wages, 107, 116.

Reciprocity, chap, vi., 117-121, 191.

Reformation, 19.

Reform Bill, 48.

Regrators, 16.

Retaliation, 120.

Revenue, protection, 114.

Ricardo, David, note 31, 38.

Richard III., 15, 16.

Rochdale, 74.

Rogers, Prof. Thorold, 66.

Roscoe, Sir Henry, 219.

Rose, J. l^(S^2iXv6., Rise of Democracy ,

notes 61 and 70.
Rural depopulation, 185-188.
Russell, Lord John, 72, 79, 83, 88-89.
Russia Company, 17.

Salt, 194.

Schmoller, Gustav, The Mercantile

System, 23-24.
Sewing-thread duties, 150-151.
Shipping trade, 126, 136.
Silk, 47.

Silver, 16, 19, 104-105.
Sliding scale, 50 and note, 58, 83.
Smith, Adam, 9, 18, 22, 26, chap.

ii., 40, 46, 49, 93, 98, 109, III,

note 114, 133, 145. 161, 196, 200,

note 216.
Smuggling, 21, 42.
Socialism, 98.

Socialism and Protection, 200-201.
Spencer, Herbert, 24.
Spitalfields silk, 47.
Stanley, Lord, 89.
Stapling, 13-14.
Statistical Journal, 43.
Statistics, tables of various, 43, 45,

47, 63, 105, 13s, 139, 150. 157.

165, 167, 169, 170, 171, 173, 17s,
176, 206, 209, 210, 212, 215

Steuart, Sir James, 27-28.

Strikes, 221, note 223.

Sugar, bounty-fed, 126-128, note -xyj.

Sweated labour, 222.

Syndicates, 161.

Tariff, 21, 94.

Tariff, reform of, chap. iii.

Technical education, 218.

Tenure of land, 184-185.

Textile trades, 137-138.

Thiers, Mons., 126.

Thompson, Colonel P., 64.

Times, The (newspaper), 82, 89,

7tote 163.
Tin, 12.

Tithe commutation, 49.
Tolls, 13.
Tonnage, 14.
Tooke, Thomas, History of Prices,

46.
Trade, authorized, 17. See also

Board of Trade.
Treaty of Commerce, 94.
Trusts, 161-162.
Turgot, Mons., 27.
Turner, Sir George, 232.

United States of America, 146-147.

Vested interests, 108-109.

Victoria, Queen, 60.

Villiers, Charles P., 51, 62, 69, 71,

77, 85, 122.
Vince, C. A., John Bright, note 77.

Walpole, Spencer, History of Eng-
land, 45.

Wealth, 28, 140.

Webb, Sidney, Labour in the Longest
Reign, note 132.

WeUington, Duke of, 58, 89, 90.

Westminster, Duke of, 82.

William IV., 60.

Wilson, George, note 64, 93.

Windeyer, Sir William. 178.

Wise, B. R., Industrial Freedom,
notes 116 and 162.

Zollverein, 225, 227. 235.

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